BILL NUMBER: AB 1209	CHAPTERED  06/28/99

	CHAPTER   44
	FILED WITH SECRETARY OF STATE   JUNE 28, 1999
	APPROVED BY GOVERNOR   JUNE 28, 1999
	PASSED THE ASSEMBLY   JUNE 28, 1999
	PASSED THE SENATE   JUNE 24, 1999
	AMENDED IN SENATE   JUNE 10, 1999

INTRODUCED BY   Committee on Health (Gallegos (Chair), Baugh (Vice
Chair), Aanestad, Bates, Corbett, Firebaugh, Kuehl, Steinberg,
Strickland, Vincent, Wayne, Wildman, and Zettel)

                        FEBRUARY 26, 1999

   An act to amend Section 14105.98 of the Welfare and Institutions
Code, relating to health, making an appropriation therefor, and
declaring the urgency thereof, to take effect immediately.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1209, Committee on Health.  Medi-Cal:  disproportionate share
hospitals.
   Existing law provides for the Medi-Cal program, administered by
the State Department of Health Services, under which qualified
low-income persons are provided with health care services.  The
Medi-Cal program provides for a special methodology of reimbursement
of disproportionate share hospitals, as defined, for the provision of
inpatient hospital services.  Under the Medi-Cal program, the
department is required to make supplemental payments to certain
disproportionate share hospitals, based on specified criteria.
Payments are made from defined intergovernmental transfers that are
paid into the Medi-Cal Inpatient Payment Adjustment Fund, as
required, with this fund being continuously appropriated for
specified purposes.
   Existing law determines the methodology of reimbursement for
disproportionate share hospitals for the 1999-2000 payment adjustment
year, based on projections regarding the federal medical assistance
percentage for federal financial participation purposes that will be
applicable to Medi-Cal program expenditures with respect to the 2000
federal fiscal year.
   This bill would revise some of the factors used to calculate the
rate of reimbursement for disproportionate share hospitals described
above and would make related changes.  This bill would also require
the State Department of Health Services to take all necessary steps
to arrange for publication of any public notices that are required or
appropriate under federal or state law, in order to ensure an
effective date for the bill of no later than June 30, 1999, for
federal medicaid purposes.  The bill would provide that the costs of
publishing any notice through a private vendor shall be recovered by
the department from the Medi-Cal Inpatient Payment Adjustment Fund.
By requiring moneys continuously appropriated from the Medi-Cal
Inpatient Adjustment Fund to be allocated for this new purpose, the
bill would make an appropriation.
   This bill would declare that it is to take effect immediately as
an urgency statute.
   Appropriation:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 14105.98 of the Welfare and Institutions Code
is amended to read:
   14105.98.  (a) The following definitions shall apply for purposes
of this section:
   (1) "Disproportionate share list" means an annual list of
disproportionate share hospitals that provide acute inpatient
services issued by the department for purposes of this section.
   (2) "Fund" means the Medi-Cal Inpatient Payment Adjustment Fund,
created pursuant to Section 14163.
   (3) "Eligible hospital" means a hospital included on a
disproportionate share list, which is eligible to receive payment
adjustments under this section with respect to a particular state
fiscal year.
   (4) "Hospital" means a health facility that is licensed pursuant
to Chapter 2 (commencing with Section 1250) of Division 2 of the
Health and Safety Code to provide acute inpatient hospital services,
and includes all components of the facility.
   (5) "Payment adjustment" or "payment adjustment amount" means an
amount paid under this section for acute inpatient hospital services
provided by a disproportionate share hospital.
   (6) "Payment adjustment year" means the particular state fiscal
year with respect to which payments are to be made to eligible
hospitals under this section.
   (7) "Payment adjustment program" means the system of Medi-Cal
payment adjustments for acute inpatient hospital services established
by this section.
   (8) "Annualized Medi-Cal inpatient paid days" means the total
number of Medi-Cal acute inpatient hospital days, regardless of dates
of service, for which payment was made by or on behalf of the
department to a hospital, under present or previous ownership, during
the most recent calendar year ending prior to the beginning of a
particular payment adjustment year, including all Medi-Cal acute
inpatient covered days of care for hospitals which are paid on a
different basis than per diem payments.
   (9) "Low-income utilization rate" means a percentage rate
determined by the department in accordance with the requirements of
Section 1396r-4(b)(3) of Title 42 of the United States Code, and
included on a disproportionate share list.
   (10) "Low-income number" means a hospital's low-income utilization
rate rounded down to the nearest whole number, and included on a
disproportionate share list.
   (11) "1991 Peer Grouping Report" means the final report issued by
the department dated May 1991, entitled "Hospital Peer Grouping."
   (12) "Major teaching hospital" means a hospital that meets the
definition of a university teaching hospital, major nonuniversity
teaching hospital, or large teaching emphasis hospital as set forth
on page 51 of the 1991 Peer Grouping Report.
   (13) "Children's hospital" means a hospital that meets the
definition of a children's hospital--state defined, as set forth on
page 53 of the 1991 Peer Grouping Report, or which is listed in
subdivision (a), or subdivisions (c) to (g), inclusive, of Section
16996.
   (14) "Acute psychiatric hospital" means a hospital that meets the
definition of an acute psychiatric hospital, a combination
psychiatric/alcohol-drug rehabilitation hospital, or a psychiatric
health facility, to the extent the facility is licensed to provide
acute inpatient hospital service, as set forth on page 52 of the 1991
Peer Grouping Report.
   (15) "Alcohol-drug rehabilitation hospital" means a hospital that
meets the definition of an alcohol-drug rehabilitation hospital as
set forth on page 52 of the 1991 Peer Grouping Report.
   (16) "Emergency services hospital" means a hospital that is a
licensed provider of basic emergency services as described in
Sections 70411 to 70419, inclusive, of Title 22 of the California
Code of Regulations, or that is a licensed provider of comprehensive
emergency medical services as described in Sections 70451 to 70459,
inclusive, of Title 22 of the California Code of Regulations.
   (17) "Medi-Cal day of acute inpatient hospital service" means any
acute inpatient day of service attributable to patients who, for
those days, were eligible for medical assistance under the California
state plan, including any day of service that is reimbursed on a
basis other than per diem payments.
   (18) "Total per diem composite amount" means, for each eligible
hospital for a particular payment adjustment year, the total of the
various per diem payment adjustment amounts to be paid to the
hospital for each eligible day as calculated under the applicable
provisions of this section.
   (19) "Supplemental lump-sum payment adjustment" means a lump-sum
amount paid under this section for acute inpatient hospital services
provided by a disproportionate share hospital.
   (20) "Projected total payment adjustment amount" means, for each
eligible hospital for a particular payment adjustment year, the
amount calculated by the department as the projected maximum total
amount the hospital is expected to receive under the payment
adjustment program for the particular payment adjustment year
(including all per diem payment adjustment amounts and any applicable
supplemental lump-sum payment adjustments).
   (21) "To align the program with the federal allotment" means to
modify the size of the payment adjustment program to be as close as
reasonably feasible to, but not to exceed, the estimated or actual
maximum state disproportionate share hospital allotment for the
particular federal fiscal year for California under Section 1396r-4
(f) of Title 42 of the United States Code.
   (22) "Descending pro rata basis" means an allocation methodology
under which a pool of funds is distributed to hospitals on a pro rata
basis until one of the recipient hospitals reaches its maximum
payment limit, after which all remaining amounts in the pool are
distributed on a pro rata basis to the recipient hospitals that have
not reached their maximum payment limits, until another hospital
reaches its maximum payment limit, and which process is repeated
until the entire pool of funds has been distributed among the
recipient hospitals.
   (23) "Secondary supplemental payment adjustment" means a payment
adjustment amount, whether paid or payable, to an eligible hospital
as a second type of supplemental distribution earned as of June 30,
1996, with respect to the 1995-96 payment adjustment year.
   (24) "OBRA 1993 payment limitation" means the hospital-specific
limitation on the total annual amount of payment adjustments to each
eligible hospital under the payment adjustment program that can be
made with federal financial participation under Section 1396r-4(g) of
Title 42 of the United States Code, as implemented pursuant to the
Medi-Cal State Plan.
   (25) "Public hospital" means a hospital that is licensed to a
county, a city, a city and county, the State of California, the
University of California, a local health care district, a local
health authority, or any other political subdivision of the state.
   (26) "Nonpublic hospital" means a hospital that satisfies all of
the following:
   (A) The hospital does not meet the definition of a public hospital
as described in paragraph (25).
   (B) The hospital does not meet the definition of a
nonpublic-converted hospital as described in paragraph (27).
   (C) The hospital does not meet the definition of a converted
hospital as described in paragraph (28).
   (27) "Nonpublic-converted hospital" means a hospital that
satisfies all of the following:
   (A) The hospital does not meet the definition of a public hospital
as described in paragraph (25).
   (B) The hospital, at any time during the 1994-95 payment
adjustment year, was a public hospital as described in paragraph
(25), whether or not the hospital currently is located at the same
site as it was located when it was a public hospital.
   (C) The hospital does not meet the definition of a converted
hospital as described in paragraph (28).
   (28) "Converted hospital" means a hospital that satisfies both of
the following:
   (A) The hospital does not meet the definition of a public hospital
as described in paragraph (25).
   (B) The hospital, at any time during the 1997-98 payment
adjustment year, was a public hospital as described in paragraph
(25), whether or not the hospital currently is located at the same
site as it was located when it was a public hospital.
   (29) "Remained in operation" or "remains in operation" means that,
except for closure or other cessation of services caused by natural
disasters or other events beyond the hospital's reasonable control,
including labor disputes, the hospital was licensed to provide
hospital inpatient services, and continued to provide, or was
available to provide, hospital inpatient services to Medi-Cal
patients throughout the particular time period in question.
   (30) "Maximum state disproportionate share hospital allotment for
California" means, with respect to the 1998 federal fiscal year and
subsequent federal fiscal years, that amount specified for California
under Section 1396r-4(f) of Title 42 of the United State Code for
that fiscal year, divided by the federal medical assistance
percentage applicable for federal financial participation purposes
for Medi-Cal program expenditures with respect to that same federal
fiscal year.
   (b) For each fiscal year commencing with 1991-92, there shall be
Medi-Cal payment adjustment amounts paid to hospitals pursuant to
this section.  The amount of payments made and the eligible hospitals
for each payment adjustment year shall be determined in accordance
with the provisions of this section.  The payments are intended to
support health care services rendered by disproportionate share
hospitals.
   (c) For each fiscal year commencing with 1991-92, the department
shall issue a disproportionate share list.  The list shall be
developed in accordance with subdivisions (e) and (f), and shall
serve as a basis for payments under this section for the particular
payment adjustment year.
   (d) (1) Except as otherwise provided by this section, the payment
adjustment amounts under this section shall be distributed as a
supplement to, and concurrent with, payments on all billings for
Medi-Cal acute inpatient hospital services that are paid through
Medi-Cal claims payment systems on or after July 1, 1991.  In
connection with those billings, the department shall pay payment
adjustment amounts in accordance with subdivision (g), (h), (i), or
(j), as applicable, to any hospital qualifying under subdivision (e).
  In addition, the department shall pay to each of those hospitals
any supplemental lump-sum payment adjustment amounts that are
payable, and shall adjust payment amounts, in accordance with
applicable provisions of this section.  The nonfederal share of all
payment adjustment amounts shall be funded by amounts from the fund.
The department shall obtain federal matching funds for the payment
adjustment program through customary Medi-Cal accounting procedures.

   (2) As a limitation to paragraph (1), all payment adjustment
amounts under this section, which are due with respect to billings
paid through Medi-Cal claims payment systems on or after July 1,
1991, shall be suspended until the time federal approval is first
obtained for the payment adjustment program as part of the Medi-Cal
program.  For purposes of this paragraph, federal approval requires
both (i) approval by appropriate federal agencies of an amendment to
the Medi-Cal State Plan, as referred to in subdivision (o), and (ii)
confirmation by appropriate federal agencies regarding the
availability of federal financial participation for the payment
adjustment program at a level of at least 40 percent of the
percentage of federal financial participation that is normally
applicable for Medi-Cal expenditures for acute inpatient hospital
services.  At the time federal approval is first obtained, the
department shall proceed pursuant to subparagraphs (A) and (B) in
connection with the suspended payment adjustment amounts.
   (A) Except as provided by subdivision (l), or by any other
subdivision of this section, any payment adjustment amounts which
were suspended shall, within 60 days, be paid for all those billings
paid through Medi-Cal claims payment systems during periods of time,
on or after July 1, 1991, for which federal approval is first
effective for the payment adjustment program.
   (B) Payment adjustment amounts shall not be paid in connection
with any Medi-Cal billings which were paid through Medi-Cal claims
payment systems during any period of time for which federal approval
is not effective for the payment adjustment program.
   (3) As a limitation to paragraph (1), the amendments to this
section enacted during calendar year 1993 shall not be implemented
until the department has obtained any approvals that are necessary
under federal law.  Until all necessary federal approvals are
obtained, the payment adjustment program shall continue as though no
amendments had been enacted during calendar year 1993.  When all
necessary federal approvals have been obtained, the amendments
enacted during calendar year 1993, shall be implemented effective as
of the earliest effective date permissible under federal law.
   (4) As a limitation to paragraph (1), amendments to this section
enacted during calendar year 1994 shall not be implemented until the
department has obtained any approvals that are necessary under
federal law.  Until all necessary federal approvals are obtained, the
payment adjustment program shall continue as though no amendments
had been enacted during calendar year 1994.  When all necessary
federal approvals have been obtained, the amendments enacted during
calendar year 1994 shall be implemented effective as of the earliest
effective date permissible under federal law.  Notwithstanding any
other provision of law, on or after the date that federal approval is
obtained the payments made prior to that date with respect to the
1994-95 payment adjustment year or subsequent payment adjustment
years shall be deemed nonfinal payments for purposes of this section
and Section 14163.  Any of those amounts paid or payable prior to
that date shall then be compared to the payments that would have been
made pursuant to the program changes as approved by the federal
government for all periods of time permissible under federal law, and
the difference, if any, shall be paid or recouped by the department,
as appropriate.
   (5) As a limitation to paragraph (1), amendments to this section
enacted during June 1996 shall not be implemented until the
department has obtained any approvals that are necessary under
federal law.  Until all necessary federal approvals are obtained, the
payment adjustment program shall continue as though no amendments
had been enacted during June 1996.  When all necessary federal
approvals have been obtained, the amendments enacted during June 1996
shall be implemented effective as of the earliest effective date
permissible under federal law.  Notwithstanding any other provision
of law, on or after the date that federal approval is obtained, the
payments made prior to that date with respect to the 1995-96 payment
adjustment year shall be deemed nonfinal payments for purposes of
this section and Section 14163.  Any of those amounts paid or payable
prior to that date shall then be compared to the payments that would
have been made pursuant to the program changes as approved by the
federal government for all periods of time permissible under federal
law, and the difference, if any, shall be paid or recouped by the
department, as appropriate.
   (6) As a limitation to paragraph (1), any amendment of this
section enacted during the period August 1, 1996, to September 30,
1996, inclusive, shall not be implemented until the department has
obtained any approvals that are necessary under federal law.  Until
all necessary federal approvals are obtained, the payment adjustment
program shall continue as though no amendments had been enacted
during the period August 1, 1996, to September 30, 1996, inclusive.
When all necessary federal approvals have been obtained, the
amendments enacted during the period August 1, 1996, to September 30,
1996, inclusive, shall be implemented effective as of the earliest
effective date permissible under federal law.  Notwithstanding any
other provision of law, on or after the date that federal approval is
obtained, the payments made prior to that date with respect to the
1996-97 payment adjustment year shall be deemed nonfinal payments for
purposes of this section and Section 14163.  Any of those amounts
paid or payable prior to that date shall then be compared to the
payments that would have been made pursuant to the program changes as
approved by the federal government for all periods of time
permissible under federal law, and the difference, if any, shall be
paid or recouped by the department, as appropriate.
   (7) As a limitation to paragraph (1), any amendment of this
section enacted during the period September 1, 1997 to September 30,
1997, inclusive, shall not be implemented until the department has
obtained any approvals that are appropriate under federal law.  Until
appropriate federal approvals are obtained, the payment adjustment
program shall continue as though amendments had not been enacted
during the period September 1, 1997 to September 30, 1997, inclusive.
  When appropriate federal approvals have been obtained, the
amendments enacted during the period September 1, 1997 to September
30, 1997, inclusive, shall be implemented effective as of the
earliest effective date permissible under federal law.
Notwithstanding any other provision of law, on or after the date that
federal approval is obtained, the payments made prior to that date
with respect to the 1997-98 payment adjustment year shall be deemed
nonfinal payments for purposes of this section and Section 14163.
Any of those amounts paid or payable prior to that date shall then be
compared to the payments that would have been made pursuant to the
program changes as approved by the federal government for all periods
of time permissible under federal law, and the difference, if any,
shall be paid or recouped by the department, as appropriate.
   (8) As a limitation to paragraph (1), any amendment of this
section enacted during the 1998 calendar year shall not be
implemented until the department has obtained any approvals that are
appropriate under federal law.  Until appropriate federal approvals
are obtained, the payment adjustment program shall continue as though
amendments had not been enacted during the 1998 calendar year.  When
appropriate federal approvals have been obtained, the amendments
enacted during the 1998 calendar year shall be implemented effective
as of the earliest effective date permissible under federal law.
Notwithstanding any other provision of law, on or after the date that
federal approval is obtained, the payments made prior to that date
with respect to the particular payment adjustment year shall be
deemed nonfinal payments for purposes of this section and Section
14163.  Any of those amounts paid or payable prior to that date shall
then be compared to the payments that would have been made pursuant
to the program changes as approved by the federal government for all
periods of time permissible under federal law, and the difference, if
any, shall be paid or recouped by the department, as appropriate.
   (9) As a limitation to paragraph (1), any amendment of this
section enacted during the period of June 1, 1999 to June 30, 1999,
inclusive, shall not be implemented until the department has obtained
any approvals that are appropriate under federal law.  Until
appropriate federal approvals are obtained, the payment adjustment
program shall continue as though amendments had not been enacted
during the period of June 1, 1999 to June 30, 1999, inclusive.  When
appropriate federal approvals have been obtained, the amendments
enacted during the period of June 1, 1999 to June 30, 1999,
inclusive, shall be implemented effective as of the earliest
effective date permissible under federal law.  Notwithstanding any
other provision of law, on or after the date that federal approval is
obtained, the payments made prior to that date with respect to the
particular payment adjustment year shall be deemed nonfinal payments
for purposes of this section and Section 14163.  Any of those amounts
paid or payable prior to that date shall then be compared to the
payments that would have been made pursuant to the program changes as
approved by the federal government for all periods of time
permissible under federal law, and the difference, if any, shall be
paid or recouped by the department, as appropriate.
   (e) To qualify for payment adjustment amounts under this section,
a hospital shall have been included on the disproportionate share
list for the particular payment adjustment year.  The list shall
consist of those hospitals which satisfy both of the following
requirements:
   (1) The hospital shall meet the federal requirements for
disproportionate share status set forth in subsection (d) of Section
1396r-4 of Title 42 of the United States Code.
   (2) Either of the following shall apply:
   (A) The hospital's medicaid inpatient utilization rate, as defined
in Section 1396r-4(b)(2) of Title 42 of the United States Code,
shall be at least one standard deviation above the mean medicaid
inpatient utilization rate for hospitals receiving medicaid payments
in the state.
   (B) The hospital's low-income utilization rate shall exceed 25
percent.
   (f) (1) For the 1991-92 payment adjustment year, a
disproportionate share list shall be issued by the department no
later than 65 days after the enactment of this section.  For
subsequent payment adjustment years, a tentative listing shall be
prepared by the department at least 60 days before the beginning of
the particular payment adjustment year, and a disproportionate share
list shall be issued no later than five days after the beginning of
the particular payment adjustment year.  All state agencies shall
take all necessary steps to supply the most recent data available to
the department to meet these deadlines.  The Office of Statewide
Health Planning and Development shall provide to the department
quarterly access to the edited and unedited confidential patient
discharge data files for all Medi-Cal eligible patients.  The
department shall maintain the confidentiality of that data to the
same extent as is required of the Office of Statewide Health Planning
and Development.  In addition, the Office of Statewide Health
Planning and Development shall provide to the department no later
than March 1 of each year, the data specified by the department, as
the data existed on the statewide data base file as of February 1 of
each year (except that for the 1991-92 payment adjustment year, the
Office of Statewide Health Planning and Development shall provide
data as it existed on the statewide data base file as of August 30,
1991), from all of the following:
   (A) Hospital annual disclosure reports, filed with the Office of
Statewide Health Planning and Development pursuant to Section 443.31
or 128735 of the Health and Safety Code, for hospital fiscal years
which ended during the calendar year ending 13 months prior to the
applicable February 1.
   (B) Annual reports of hospitals, filed with the Office of
Statewide Health Planning and Development pursuant to Section 439.2
or 127285 of the Health and Safety Code, for the calendar year ending
13 months prior to the applicable February 1.
   (C) Hospital patient discharge data reports, filed with the Office
of Statewide Health Planning and Development pursuant to subdivision
(g) of Section 443.31 or 128735 of the Health and Safety Code, for
the calendar year ending 13 months prior to the applicable February
1.
   (D) Any other materials on file with the Office of Statewide
Health Planning and Development.
   (2) The disproportionate share list shall show all of the
following:
   (A) The name and license number of the hospital.
   (B) Expressed as a percentage, the hospital's Medi-Cal utilization
rate and low-income utilization rate as referred to in paragraph (2)
of subdivision (e).  The department shall determine these rates in
accordance with paragraph (4).
   (C) Based on the hospital's low-income utilization rate, the
hospital's low-income number.
   (3) The department shall determine a hospital's satisfaction of
paragraph (1) of subdivision (e) based on the most recent annual data
available, as it existed on the Office of Statewide Health Planning
and Development statewide data base file as of February 1 of each
year, and August 30 for the 1991-92 payment adjustment year, whether
the data relates to operations under present or previous ownership.
   (4) To determine a hospital's Medi-Cal inpatient utilization rate
and low-income utilization rate for purposes of disproportionate
share lists, the department shall utilize the same methodology,
formulae, and data sources as set forth in connection with interim
determinations in Attachment 4.19-A of the Medi-Cal State Plan
(effective on or about July 1, 1990), and as subsequently amended by
Medi-Cal State Plan amendments relating to the payment adjustment
program submitted to and approved by the federal Health Care
Financing Administration, except that the following shall apply:
   (A) The calculations shall not be interim, but shall be final for
purposes of this section.
   (B) To the extent permitted by federal law, the payment adjustment
amounts provided to hospitals pursuant to this section shall not be
included for any purpose in the calculations and determinations made
pursuant to this section.
   (C) Any other variation otherwise required by this section or by
federal law.
   (D) The data utilized by the department shall relate to the
hospital under present and previous ownership.  When there has been a
change of ownership, a change in the location of the main hospital
facility, or a material change in patient admission patterns during
the 24 months immediately prior to the payment adjustment year, and
the change has resulted in a diminution of access for Medi-Cal
inpatients at the hospital, all as determined by the department, the
department shall, to the extent permitted by federal law, utilize
current data that are reflective of the diminution of access, even if
the data are not annual data.
   (E) Unless expressly provided otherwise by this section, the
hospital's low-income utilization rate shall be based on the most
recent annual data available from annual hospital reports existing on
the Office of Statewide Health Planning and Development data base
file as of February 1 of each year.
                                  (F) (i) If, for the 1994-95 payment
adjustment year, some or all of the annual data elements available
to the department from hospital reports filed with the Office of
Statewide Health Planning and Development for purposes of computing
hospital low-income utilization rates are different than in prior
years due to changes in data reporting requirements of the Office of
Statewide Health Planning and Development or changes in other state
health care programs, the department shall take the necessary steps
to obtain from hospitals appropriate data in order to clarify the
annual data filed with the Office of Statewide Health Planning and
Development.  This shall be done by the department in order to ensure
that low-income utilization rates are determined in a manner as
equivalent as possible to the approach and methodology used for the
1991-92 payment adjustment year.
   (ii) The efforts of the department to obtain and apply data for
the purposes described in clause (i) shall include a survey to
collect, from one or more hospitals, any data necessary to calculate
the low-income utilization rates in accordance with clause (i).  The
purpose for the survey shall be to clarify the data already included
by hospitals in their annual reports submitted to the Office of
Statewide Health Planning and Development.  The data requested by the
department in the survey may include, among other things,
information regarding the manner in which payments made to hospitals
under this section were reported by the hospitals to the Office of
Statewide Health Planning and Development.  The data requested may
also include information regarding the manner in which hospitals
reported figures relating to charity care, bad debts, and amounts
received in connection with state or local indigent care programs.
   (iii) In connection with any survey conducted under clause (ii),
the department may require that hospitals submit responses in
accordance with a deadline established by the department, and that
the responses be supported by a verification of a hospital
representative.  Should any hospital not respond on a timely basis in
accordance with protocols established by the department, the
department shall utilize prior year data, adjusted by the department
in its discretion, to calculate the hospital's low-income utilization
rate.
   (G) Notwithstanding any other provision of law, all payment
adjustment amounts, including per diem payment adjustment amounts and
supplemental lump-sum payment adjustments, paid or payable to a
hospital under this section, shall be recorded on an accrual basis of
accounting in reports filed by the hospital with the Office of
Statewide Health Planning and Development or the department.
   (5) For purposes of payment adjustment amounts under this section,
each disproportionate share list shall be considered complete when
issued by the department pursuant to paragraph (1).  Nothing on a
disproportionate share list, once issued by the department, shall be
modified for any reason, other than mathematical or typographical
errors or omissions on the part of the department or the Office of
Statewide Health Planning and Development in preparation of the list.

   (6) No Medi-Cal State Plan amendment of the type referred to in
paragraph (4) shall be valid if inconsistent with this section.  For
those Medi-Cal State Plan amendments of the type referred to in
paragraph (4), to be initially submitted to the federal Health Care
Financing Administration on or after the operative date of this
paragraph, these amendments shall be provided to representatives of
the hospital industry, including, but not limited to, the California
Healthcare Association, as soon as possible, but in no event less
than 30 days prior to submission of the amendment to the federal
Health Care Financing Administration.  If, in the public interest,
the director determines that exigent circumstances necessitate that
the 30-day requirement cannot be met, the director shall immediately
in writing advise the Chairperson of the Senate Committee on Health
and Human Services and the Assembly Committee on Health of the
exigent circumstances and the department's timetable for providing
the amendment to the hospital industry.
   (g) For each Medi-Cal day of acute inpatient hospital service paid
by or on behalf of the department during a payment adjustment year,
regardless of dates of service, to a hospital on the applicable
disproportionate share list, where that hospital, on the first day of
the payment adjustment year, is a major teaching hospital, the
hospital shall be paid the sum of all of the following amounts,
except as limited by other applicable provisions of this section:
   (1) A minimum payment adjustment of three hundred dollars ($300).

   (2) The sum of the following amounts, minus three hundred dollars
($300):
   (A) A ninety dollar ($90) payment adjustment for each percentage
point, from 25 percent to 29 percent, inclusive, of the hospital's
low-income number as shown on the disproportionate share list.
   (B) A seventy dollar ($70) payment adjustment for each percentage
point, from 30 percent to 34 percent, inclusive, of the hospital's
low-income number as shown on the disproportionate share list.
   (C) A fifty dollar ($50) payment adjustment for each percentage
point, from 35 percent to 44 percent, inclusive, of the hospital's
low-income number as shown on the disproportionate share list.
   (D) A thirty dollar ($30) payment adjustment for each percentage
point, from 45 percent to 64 percent, inclusive, of the hospital's
low-income number as shown on the disproportionate share list.
   (E) A ten dollar ($10) payment adjustment for each percentage
point, from 65 percent to 80 percent, inclusive, of the hospital's
low-income number as shown on the disproportionate share list.
   (3) If the sum calculated under paragraph (2) is less than zero,
it shall be disregarded for payment purposes.
   (h) For each Medi-Cal day of acute inpatient hospital service paid
by or on behalf of the department during a payment adjustment year,
regardless of dates of service, to a hospital on the applicable
disproportionate share list, where that hospital, on the first day of
the payment adjustment year, is a children's hospital, the hospital
shall be paid the sum of four hundred fifty dollars ($450), except as
limited by other applicable provisions of this section.
   (i) For each Medi-Cal day of acute inpatient hospital service paid
by or on behalf of the department during a payment adjustment year,
regardless of dates of service, to a hospital on the applicable
disproportionate share list, where that hospital, on the first day of
the payment adjustment year, is an acute psychiatric hospital or an
alcohol-drug rehabilitation hospital, the hospital shall be paid the
sum of all of the following amounts, except as limited by other
applicable provisions of this section:
   (1) A minimum payment adjustment of fifty dollars ($50).
   (2) The sum of the following amounts, minus fifty dollars ($50):
   (A) A ten dollar ($10) payment adjustment for each percentage
point, from 25 to 29 percent, inclusive, of the hospital's low-income
number as shown on the disproportionate share list.
   (B) A seven dollar ($7) payment adjustment for each percentage
point, from 30 to 34 percent, inclusive, of the hospital's low-income
number as shown on the disproportionate share list.
   (C) A five dollar ($5) payment adjustment for each percentage
point, from 35 to 44 percent, inclusive, of the hospital's low-income
number as shown on the disproportionate share list.
   (D) A two dollar ($2) payment adjustment for each percentage
point, from 45 to 64 percent, inclusive, of the hospital's low-income
number as shown on the disproportionate share list.
   (E) A one dollar ($1) payment adjustment for each percentage
point, from 65 to 80 percent, inclusive, of the hospital's low-income
number as shown on the disproportionate share list.
   (3) If the sum calculated under paragraph (2) is less than zero,
it shall be disregarded for payment purposes.
   (j) For each Medi-Cal day of acute inpatient hospital service paid
by or on behalf of the department during a payment adjustment year,
regardless of dates of service, to a hospital on the applicable
disproportionate share list, where that hospital does not meet the
criteria for receiving payments under subdivision (g), (h), or (i)
above, the hospital shall be paid the sum of all of the following
amounts, except as limited by other applicable provisions of this
section:
   (1) A minimum payment adjustment of one hundred dollars ($100).
   (2) If the hospital is an emergency services hospital at the time
the payment adjustment is paid, a two hundred dollar ($200) payment
adjustment.
   (3) The sum of the following amounts minus one hundred dollars
($100), and minus an additional two hundred dollars ($200) if the
hospital is an emergency services hospital at the time the payment
adjustment is paid:
   (A) A forty dollar ($40) payment adjustment for each percentage
point, from 25 percent to 29 percent, inclusive, of the hospital's
low-income number as shown on the disproportionate share list.
   (B) A thirty-five dollar ($35) payment adjustment for each
percentage point, from 30 percent to 34 percent, inclusive, of the
hospital's low-income number as shown on the disproportionate share
list.
   (C) A thirty dollar ($30) payment adjustment for each percentage
point, from 35 percent to 44 percent, inclusive, of the hospital's
low-income number as shown on the disproportionate share list.
   (D) A twenty dollar ($20) payment adjustment for each percentage
point, from 45 percent to 64 percent, inclusive, of the hospital's
low-income number as shown on the disproportionate share list.
   (E) A fifteen dollar ($15) payment adjustment for each percentage
point, from 65 percent to 80 percent, inclusive, of the hospital's
low-income number as shown on the disproportionate share list.
   (4) If the sum calculated under paragraph (3) is less than zero,
it shall be disregarded for payment purposes.
   (k) (1) For any particular payment adjustment year, no hospital
may qualify for payments under more than one subdivision among
subdivisions (g), (h), (i), and (j).  If any hospital qualifies under
more than one subdivision, the department shall determine which
subdivision shall apply for payments.
   (2) For each payment adjustment year beginning with 1992-93, the
total applicable per diem payment adjustment amount calculated for
each eligible hospital pursuant to subdivision (g), (h), (i), or (j)
shall be adjusted by a percentage identical to the percentage
increase in transfer amounts that the department has authorized for
use pursuant to paragraph (1) of subdivision (h) of Section 14163 for
the particular fiscal year.
   (3) If an eligible hospital ordinarily is paid by or on behalf of
the department for Medi-Cal acute inpatient hospital services based
on a payment methodology other than per diem payments, the eligible
hospital shall receive payment adjustment amounts under subdivision
(g), (h), (i), or (j) of this section based on its approved Medi-Cal
days of acute inpatient hospital care, in the same fashion as all
other eligible hospitals under this section.
   (l) (1) (A) In determining Medi-Cal days of service for purposes
of payment adjustments under this section, the department shall
recognize all acute inpatient hospital days of service required to be
taken into account under federal law.
   (B) For the 1992-93 payment year, the department may consider the
Medi-Cal days of service provided by the qualifying hospitals for
Medi-Cal patients covered by the prepaid health plans contracting
directly with the Medi-Cal program in achieving their maximum
payments.
   (C) For 1993-94 and subsequent payment years, the department may
consider the Medi-Cal days of service provided by hospitals for
Medi-Cal patients covered by the prepaid health plans contracting
directly with the Medi-Cal program in determining the Medi-Cal
utilization rate and the maximum days of payment.  Additionally, the
department may consider the days of service provided by the
qualifying hospitals for Medi-Cal patients covered by the prepaid
health plans contracting directly with the Medi-Cal program in
achieving their maximum payments in those payment years.
   (D) In order to meet the requirements of subparagraph (C), the
Office of Statewide Health Planning and Development shall provide to
the department quarterly access to all data elements on the edited
and unedited confidential patient discharge data files, including
Social Security account numbers.  The department shall match these
data with the department's Medi-Cal Eligibility Data System files to
extract any data necessary to meet the requirements of subparagraph
(C).  The department shall maintain the confidentiality of all
patient discharge data to the same extent as is required of the
Office of Statewide Health Planning and Development.
   (2) Notwithstanding paragraph (1), there shall be, for each
eligible hospital, a maximum limit on the number of Medi-Cal acute
inpatient hospital days for which payment adjustment amounts may be
paid under this section with respect to each payment adjustment year.
  The maximum limit shall be that number of days that equals 80
percent of the eligible hospital's annualized Medi-Cal inpatient paid
days, as determined from all Medi-Cal paid claims records available
through April 1 preceding the beginning of the payment adjustment
year.
   (m) No payment rate for any service rendered by any hospital under
the Medi-Cal selective provider contracting program shall be reduced
as a result of this section.
   (n) Notwithstanding any other provision of law, to the extent
consistent with federal law, and except as provided by this section,
no maximum payment limit shall be placed on the amount of Medi-Cal
payment adjustments which may be made to disproportionate share
hospitals.  The payments made to disproportionate share hospitals
pursuant to this section and Section 14105.99 shall not cause any
other amounts paid or payable to a hospital to be deemed in excess of
any applicable maximum payment limit.
   (o) The department shall promptly seek any necessary federal
approvals in order to implement this section, including any
amendments.  Pursuant to Section 1396r-4 of Title 42 of the United
States Code, and related federal medicaid statutes and regulations,
payment adjustment systems for inpatient hospital services rendered
by disproportionate share hospitals shall be included in a state's
medicaid plan.  Therefore, the department shall, prior to the end of
the calendar quarter during which this section is enacted or amended,
submit for federal approval an amendment to the Medi-Cal State Plan
in connection with the payment adjustment program.
   (p) (1) The department shall compute, prior to the beginning of
each payment adjustment year, the projected size of the payment
adjustment program for the particular payment adjustment year.  To do
so, the department shall determine the projected total payment
adjustment amount for each eligible hospital, and shall add these
amounts together to determine the projected total size of the
program.  To the extent this projected total figure for the program
exceeds the portion of the maximum state disproportionate share
hospital allotment for California under federal law that the
department anticipates will be available for the period in question,
the department shall reduce the total per diem composite amounts of
the various eligible hospitals in the fashion described below so that
the allotment in question will not be exceeded.
   (2) As an initial step, all total per diem composite amounts for
the entire payment adjustment year shall be reduced proportionately
not to exceed 2 percent of each total per diem composite amount.
   (3) If the reductions authorized by paragraph (2) are insufficient
to align the program with the federal allotment for California,
then, to the extent permitted by federal law, the following shall
apply:
   (A) The adjusted total per diem composite amounts, as calculated
under paragraph (2), shall remain in effect for each eligible
hospital whose low-income number is 30 percent or more.
   (B) The adjusted total per diem composite amounts, as calculated
under paragraph (2), for all other eligible hospitals shall be
further reduced proportionately to align the program with the federal
allotment, but in no event to a level that is less than 65 percent
of the total per diem composite amount that would have been payable
to the eligible hospital had no reductions taken place.
   (4) If the steps set forth in paragraph (3) are not permissible
under federal law, or are not adequate to align the program with the
federal allotment, the adjusted total per diem composite amounts for
all eligible hospitals for the entire payment adjustment year shall
be further reduced proportionately to align the program with the
federal allotment, but in no event to a level that would result in
adjusted total per diem composite amounts that are less than 65
percent of the total per diem composite amounts that would have been
payable had no reductions taken place.
   (5) When all eligible hospitals have been reduced to the
65-percent level set forth in paragraphs (3) and (4), the adjusted
total per diem composite amounts for all eligible hospitals shall be
further reduced proportionately as necessary to align the program
with the federal allotment.
   (6) This subdivision shall not apply to the 1995-96 payment
adjustment year.
   (q) (1) If it is necessary to apply the provisions of paragraph
(3) of subdivision (p) at any time, the department shall, as soon as
practicable, evaluate why the insufficiency arose and identify the
projected occurrence and duration of any future insufficiencies.
   (2) If the department determines as a result of the evaluations
under paragraph (1) that (A) implementation of paragraph (3) of
subdivision (p) will likely be necessary to resolve additional
insufficiencies for the current payment adjustment year or the next
payment adjustment year; and (B) that the level of federal financial
participation realized by the payment adjustment program, for the
current payment adjustment year as a whole, will be less than 30
percent of the percentage of federal financial participation that
normally is applicable for Medi-Cal expenditures for acute inpatient
hospital services, and that the level of federal financial
participation for the payment adjustment program is expected to
continue to remain below that 30-percent level for the next payment
adjustment year as a whole, the department shall, as soon as
practicable, implement paragraphs (3) and (4).
   (3) If the department determines that the circumstances described
in paragraph (2) are present, the payment adjustment program shall be
terminated, effective as of the earliest date permissible under
federal law.  In that event, all installment payments to the fund
which are already due pursuant to Section 14163 at the time of the
department's determination shall remain due, and shall be collected
by the Controller.  However, installment payments which are not yet
due at that time shall not become due.
   (4) Within 90 days after the termination of the payment adjustment
program, as referred to in paragraph (3), or as soon as practicable,
the department shall determine whether any amounts remain in the
fund that are not needed to pay prior payment adjustment amounts
under this section.  If remaining amounts exist in the fund, they
shall be refunded to transferor entities on a pro rata basis, within
45 days after the date of the department's determination.
   (r) (1) The state shall be held harmless from any federal
disallowance resulting from payments made under this section, and
from payments made to hospitals based on transfers accepted by the
department under Section 14164.  Any hospital that has received
payments under this section, or based on transfers accepted by the
department under Section 14164, shall be liable for any audit
exception or federal disallowance only with respect to the payments
made to that hospital.  The department shall recoup from a hospital
the amount of any audit exception or federal disallowance in the
manner authorized by applicable laws and regulations.
   (2) Notwithstanding any other provisions of law, if any payment
adjustment that has been paid, or that otherwise would have been
payable to an eligible hospital under this section, exceeds the OBRA
1993 payment limitation for the particular hospital, the department
shall withhold or recoup the payment adjustment amount that exceeds
the limitation.  The nonfederal component of the amount withheld or
recouped shall be redeposited in, or shall remain in, the fund, as
applicable, until used for the purposes described in paragraph (2) of
subdivision (j) of Section 14163.
   (s) (1) The department may utilize existing administrative appeal
procedures for purposes of any appealable matter that arises under
the payment adjustment program.  The matters that may be appealed
shall be limited to those related to the following:
   (A) Paragraph (5) of subdivision (f).
   (B) State audit disallowances of amounts paid to hospitals under
the payment adjustment program.
   (2) Calculations which are final pursuant to paragraph (4) or (5)
of subdivision (f) or the procedures or data on which those
calculations are based, shall not be appealed.
   (t) (1) Except as provided in paragraph (2), the department shall
take all appropriate steps permitted by law and the Medi-Cal State
Plan to ensure the following for all years of the payment adjustment
program:
   (A) That well-baby (nursery) days and acute administrative days
are included in the payment adjustment program in the same fashion as
all other Medi-Cal days of acute inpatient hospital service.
   (B) That, to the same extent as any other Medi-Cal days of acute
inpatient hospital service, well-baby (nursery) days and acute
administrative days are included as payable days under the payment
adjustment program and in the total of annualized Medi-Cal inpatient
paid days.
   (C) That, if pursuant to paragraph (2), any well-baby (nursery)
days or acute administrative days are not included in the payment
adjustment program for payment purposes for any parts of the 1992-93
or 1993-94 payment adjustment years, all those days are nevertheless
included in the total of annualized Medi-Cal inpatient paid days for
all purposes under the payment adjustment program, unless otherwise
barred by paragraph (2).
   (2) In no event shall paragraph (1) be implemented in a fashion
that is inconsistent with federal medicaid law or the Medi-Cal State
Plan.
   (u) (1) For the 1993-94 payment adjustment year, each eligible
hospital shall also be eligible to receive a supplemental lump-sum
payment adjustment, which shall be payable as a result of the
hospital being included on the disproportionate share list as of
September 30, 1993.  For purposes of federal medicaid rules,
including Section 447.297(d) of Title 42 of the Code of Federal
Regulations, the supplemental payment adjustments shall be applicable
to the federal fiscal year that ends on September 30, 1993.
   (2) The availability of supplemental payment adjustments under
this subdivision shall be determined as follows:
   (A) The final maximum state disproportionate share hospital
allotment for California under the provisions of applicable federal
medicaid rules shall be identified for the 1993 federal fiscal year.
This final allotment is two billion one hundred ninety-one million
four hundred fifty-one thousand dollars ($2,191,451,000), as
specified at page 43186 of Volume 58 of the Federal Register.
   (B) The total amount of all per diem payment adjustment amounts
under this section, whether paid or payable, that are applicable to
the 1993 federal fiscal year shall be determined.  The applicability
of the per diem payment adjustment amounts to the 1993 federal fiscal
year shall be determined in accordance with federal medicaid rules,
including Sections 447.297(d)(3) and 447.298 of Title 42 of the Code
of Federal Regulations.
   (C) The figure determined under subparagraph (B) shall be
subtracted from the figure identified under subparagraph (A).  If the
remainder is a positive figure, supplemental lump-sum payment
adjustments shall be made under this subdivision in accordance with
paragraph (3).
   (3) The amount of the supplemental lump-sum payment adjustment to
each eligible hospital shall be computed as follows:
   (A) The projected total of all per diem payment adjustment amounts
payable to each particular eligible hospital under this section for
the 1993-94 payment adjustment year shall be determined.  For each
hospital, this figure shall be identical to the figure used for the
same hospital in the calculations regarding transfer amounts under
subdivision (h) of Section 14163 for the 1993-94 state fiscal year.
   (B) The projected totals for all eligible hospitals determined
under subparagraph (A) shall be added together to determine an
aggregate total of all projected per diem payment adjustments for the
1993-94 payment adjustment year.  This figure shall be identical to
the aggregate figure for all hospitals used in the calculations
regarding transfer amounts under subdivision (h) of Section 14163 for
the 1993-94 state fiscal year.
   (C) The figure determined for each eligible hospital under
subparagraph (A) shall be divided by the aggregate figure determined
under subparagraph (B), yielding a percentage figure for each
hospital.
   (D) The percentage figure determined for each hospital under
subparagraph (C) shall be multiplied by the positive remainder
calculated under subparagraph (C) of paragraph (2).
   (E) The product as so determined for each eligible hospital under
subparagraph (D) shall be the supplemental lump-sum payment
adjustment amount payable to the particular hospital.
   (4) The department shall make partial payments of the supplemental
lump-sum payment adjustments to eligible hospitals on or before
January 1, 1994.  The department shall make final calculations
regarding the supplemental lump-sum payments based on data available
as of March 1, 1994, and shall distribute the final payments promptly
thereafter.
   (5) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.  In doing so, the
department shall comply with any procedures instituted by the Health
                                               Care Financing
Administration in connection with Sections 447.297(d)(3) and 447.298
of Title 42 of the Code of Federal Regulations.
   (v) (1) For the 1993-94 payment adjustment year, each eligible
hospital that remains in operation as of June 30, 1994, shall also be
eligible to receive a supplemental lump-sum payment adjustment,
which shall be payable as a result of the hospital being a
disproportionate share hospital in operation as of that date.
   (2) The availability of supplemental lump-sum payment adjustments
under this subdivision shall be determined by the department as
follows:
   (A) The final maximum state disproportionate share hospital
allotment for California under the provisions of applicable federal
medicaid rules shall be identified for the 1994 federal fiscal year.
This final allotment is two billion one hundred ninety-one million
four hundred fifty-one thousand dollars ($2,191,451,000), as
specified on page 22676 of Volume 59 of the Federal Register.
   (B) The total amount of all per diem payment adjustment amounts
under this section, whether paid or payable, that are applicable to
the period October 1, 1993, through June 30, 1994, shall be
determined.  The applicability of the per diem payment adjustment
amounts to this period of time shall be determined in accordance with
federal medicaid rules, including Sections 447.297(d)(3) and 447.298
of Title 42 of the Code of Federal Regulations.
   (C) The figure determined under subparagraph (B) shall be
subtracted from the figure identified under subparagraph (A).  If the
remainder is a positive figure, supplemental lump-sum payment
adjustments shall be made under this subdivision in accordance with
paragraph (3).
   (3) The amount of the supplemental lump-sum payment adjustment to
each hospital shall be computed as follows:
   (A) The projected total of all other payment adjustment amounts
payable to each particular hospital under this section applicable to
the 1993-94 payment adjustment year shall be determined.  For each
hospital, this figure shall be identical to the sum of the figures
used for the same hospital in the calculations regarding transfer
amounts under subdivision (h) of Section 14163 for the 1993-94 state
fiscal year, not including the supplemental lump-sum payments
described in this subdivision.
   (B) The projected totals for all hospitals determined under
subparagraph (A) shall be added together to determine an aggregate
total.  This aggregate total shall be identical to the aggregate
figure for all hospitals used in the calculations regarding transfer
amounts under subdivision (h) of Section 14163 for the 1993-94 state
fiscal year, not including the supplemental lump-sum payments
described in this subdivision.
   (C) The figure determined for each hospital under subparagraph (A)
shall be divided by the aggregate figure determined under
subparagraph (B), yielding a percentage figure for each hospital.
   (D) The percentage figure determined for each hospital under
subparagraph (C) shall be multiplied by the positive remainder
calculated under subparagraph (C) of paragraph (2).
   (E) The product determined under subparagraph (D) for each
hospital shall be the supplemental lump-sum payment adjustment amount
payable to the particular hospital, which shall be payable because
the facility is a disproportionate share hospital in operation as of
June 30, 1994.
   (4) The department shall make interim and final payments of the
supplemental lump-sum payment adjustments to hospitals on or before
October 31, 1994.
   (5) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.  In doing so, the
department shall comply with any procedures instituted by the Health
Care Financing Administration in connection with Sections 447.297(d)
(3) and 447.298 of Title 42 of the Code of Federal Regulations.
   (w) (1) For the 1994-95 payment adjustment year, each eligible
hospital that remains in operation as of June 30, 1995, shall also be
eligible to receive a supplemental lump-sum payment adjustment,
which shall be payable as a result of the hospital being a
disproportionate share hospital in operation as of that date.
   (2) The availability of supplemental lump-sum payment adjustments
under this subdivision shall be determined by the department as
follows:
   (A) The final maximum state disproportionate share hospital
allotment for California under the provisions of applicable federal
medicaid rules shall be identified for the 1995 federal fiscal year.

   (B) The total amount of all per diem payment adjustment amounts
under this section, whether paid or payable, that are applicable to
the period October 1, 1994, through June 30, 1995, shall be
determined.  The applicability of the per diem payment adjustment
amounts to this period of time shall be determined in accordance with
federal medicaid rules, including Sections 447.297(d)(3) and 447.298
of Title 42 of the Code of Federal Regulations.
   (C) The figure determined under subparagraph (B) shall be
subtracted from the figure identified under subparagraph (A).  If the
remainder is a positive figure, supplemental lump-sum payment
adjustments shall be made under this subdivision in accordance with
paragraph (3).
   (3) The amount of the supplemental lump-sum payment adjustment to
each hospital shall be computed as follows:
   (A) The projected total of all other payment adjustment amounts
payable to each particular hospital under this section applicable to
the 1994-95 payment adjustment year shall be determined.  For each
hospital, this figure shall be identical to the sum of the figures
used for the same hospital in the calculations regarding transfer
amounts under subdivision (h) of Section 14163 for the 1994-95 state
fiscal year, not including the supplemental lump-sum payments
described in this subdivision.
   (B) The projected totals for all hospitals determined under
subparagraph (A) shall be added together to determine an aggregate
total.  This aggregate total shall be identical to the aggregate
figure for all hospitals used in the calculations regarding transfer
amounts under subdivision (h) of Section 14163 for the 1994-95 state
fiscal year, not including the supplemental lump-sum payments
described in this subdivision.
   (C) The figure determined for each hospital under subparagraph (A)
shall be divided by the aggregate figure determined under
subparagraph (B), yielding a percentage figure for each hospital.
   (D) The percentage figure determined for each hospital under
subparagraph (C) shall be multiplied by the positive remainder
calculated under subparagraph (C) of paragraph (2).
   (E) The product as so determined under subparagraph (D) for each
hospital shall be the supplemental lump-sum payment adjustment amount
payable to the particular hospital, which shall be payable because
the facility is a disproportionate share hospital in operation as of
June 30, 1995.
   (4) The department shall make interim and final payments of the
supplemental lump-sum payment adjustments to hospitals on or before
October 31, 1995.
   (5) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.  In doing so, the
department shall comply with any procedures instituted by the Health
Care Financing Administration in connection with Sections 447.297(d)
(3) and 447.298 of Title 42 of the Code of Federal Regulations.
   (x) (1) With respect to per diem payment adjustments otherwise
payable in connection with the period of July 1 through September 30
of the 1994-95 payment adjustment year, payment adjustment amounts
shall be adjusted as described in paragraph (2).
   (2) No per diem payment adjustment amounts shall be payable in
connection with the period of July 1 through September 30 of the
1994-95 payment adjustment year.  The Medi-Cal days of acute
inpatient hospital service paid by or on behalf of the department
that otherwise would have given rise to payment adjustment amounts
with respect to this period of time shall not count toward the
maximum limit set forth in paragraph (2) of subdivision (l).
   (y) Notwithstanding any other provision of law, except subdivision
(z), the payment adjustment program for the 1995-96 payment
adjustment year shall be structured as set forth below.
   (1) (A) The department shall, in the manner used for prior years,
compute the projected total payment adjustment amounts for all
eligible hospitals, by determining for each eligible hospital its
total per diem composite amount and multiplying that figure by 80
percent of the hospital's annualized Medi-Cal inpatient paid days.
   (B) The products of the calculations under subparagraph (A) for
all eligible hospitals shall be added together.  The sum of all these
figures shall be the unadjusted projected total payment adjustment
program for the 1995-96 payment adjustment year.
   (2) The remaining amount available as part of the state
disproportionate share hospital allotment for California under
applicable federal rules for July 1995 through September 1995 (as
part of the 1995 federal fiscal year) shall be recognized as being
zero.
   (3) The department shall estimate what the state disproportionate
share hospital allotment for California will be for the 1996 federal
fiscal year under applicable federal rules.  The estimate shall not
exceed the allotment that was applicable for California for the 1995
federal fiscal year.
   (4) The estimate identified by the department under paragraph (3)
shall be reduced by subtracting the total amount of the supplemental
lump-sum payments paid or payable under subdivisions (v) and (w).
   (5) The remainder determined under paragraph (4) shall be added to
the amount determined under paragraph (2).  The total of those two
amounts shall be the unadjusted tentative size of the payment
adjustment program for the 1995-96 payment adjustment year.
   (6) The total per diem composite amount computed for each eligible
hospital under subparagraph (A) of paragraph (1) shall be modified
as follows:
   (A) The department shall reduce the total per diem composite
amount for each eligible hospital by multiplying the amount by an
identical percentage.  The percentage figure to be used for this
purpose shall be that percentage that is derived by dividing the
amount determined under paragraph (5) by the unadjusted projected
total payment adjustment program amount determined under subparagraph
(B) of paragraph (1).
   (B) The percentage figure derived under subparagraph (A) shall be
applied to the total per diem composite amount for each eligible
hospital, yielding an adjusted total per diem composite amount for
each hospital for the 1995-96 payment adjustment year.
   (C) (i) The adjusted total per diem composite amount determined
under subparagraph (B) for each eligible hospital shall be multiplied
by 80 percent of the hospital's annualized Medi-Cal inpatient paid
days.
   (ii) The amount computed for each hospital under clause (i) shall
be compared to the OBRA 1993 payment limitation that, in accordance
with applicable provisions of the Medi-Cal State Plan, the department
has computed for the particular hospital.
   (iii) Where the amount computed under clause (i) for the
particular hospital is less than the OBRA 1993 payment limitation for
the hospital, the amount computed under clause (i) shall be used for
purposes of clause (v).
   (iv) Where the amount computed under clause (i) for the particular
hospital exceeds the OBRA 1993 payment limitation for the hospital,
the amount computed under clause (i) shall be reduced to an amount
equal to the OBRA 1993 payment limitation for the particular
hospital.  The amount as so reduced shall be used for purposes of
clause (v).
   (v) The amount for each hospital, as determined under either
clause (iii) or clause (iv), as applicable, shall be the adjusted
projected total payment adjustment amount for the hospital for the
1995-96 payment adjustment year.
   (D) The adjusted figures computed for all eligible hospitals under
subparagraph (C) shall be added together, yielding the adjusted
tentative size of the payment adjustment program for the 1995-96
payment adjustment year.
   (7) The adjusted tentative size of the payment adjustment program
for the 1995-96 payment adjustment year as determined under
subparagraph (D) of paragraph (6), and the adjusted projected total
payment adjustment amount for each eligible hospital, as determined
under subparagraph (C) of paragraph (6), shall be distributed as
follows:
   (A) No per diem payment adjustment amounts shall be payable in
connection with the period of July 1 through September 30 of the
1995-96 payment adjustment year.  The Medi-Cal days of acute
inpatient hospital service paid by or on behalf of the department
that otherwise would have given rise to payment adjustment amounts
with respect to this period of time shall not count toward the
maximum limit set forth in paragraph (2) of subdivision (l).
   (B) For all eligible hospitals, the adjusted per diem composite
amounts (as determined under subparagraph (B) of paragraph (6)) shall
be the amounts payable with respect to the period of October 1
through June 30 of the 1995-96 payment adjustment year, subject to
the applicable provisions of subdivision (z).
   (8) For the 1995-96 payment adjustment year, each eligible
hospital that remains in operation as of June 30, 1996, shall also be
eligible to receive a supplemental lump-sum payment adjustment,
which shall be payable as a result of the facility being a
disproportionate share hospital in operation as of that date.  The
availability of supplemental lump-sum payment adjustments under this
paragraph shall be determined by the department as follows:
   (A) The adjusted projected total payment adjustment amount for
each hospital, as determined under subparagraph (C) of paragraph (6),
shall be identified.
   (B) The total amount of all per diem payment adjustment amounts
under this section, whether paid or payable, that are applicable to
the period July 1, 1995, through June 30, 1996, shall be determined
for each hospital, taking into account subparagraph (A) of paragraph
(7).  The applicability of the per diem payment adjustment amounts to
this period of time shall be determined in accordance with federal
medicaid rules, including Sections 447.297(d)(3) and 447.298 of Title
42 of the Code of Federal Regulations.
   (C) The amount determined under subparagraph (B) for each hospital
shall be subtracted from the amount identified under subparagraph
(A) for each hospital.  If the remainder is a positive figure for the
particular hospital, the supplemental lump-sum payment adjustment
for the hospital shall be the positive remainder amount, which shall
be payable because the facility is a disproportionate share hospital
in operation as of June 30, 1996.
   (D) The department shall make interim and final payments of the
supplemental lump-sum payment adjustments under this paragraph on or
before September 30, 1996.
   (9) Except as provided in subparagraph (C), for the 1995-96
payment adjustment year each eligible hospital that remains in
operation as of June 30, 1996, shall also be eligible to receive a
secondary supplemental payment adjustment, which shall be payable as
a result of the facility being a disproportionate share hospital in
operation as of that date.  The availability of secondary
supplemental payment adjustments under this paragraph shall be
determined by the department as follows:
   (A) The maximum amount of secondary supplemental payment
adjustments available pursuant to this paragraph shall be calculated
as follows:
   (i) The total amount of all per diem payment adjustment amounts,
whether paid or payable, for the 1995-96 payment adjustment year, as
determined under subparagraph (B) of paragraph (8), shall be
identified.
   (ii) The total amount of all supplemental lump-sum payment
adjustments, whether paid or payable, as determined under
subparagraph (C) of paragraph (8), shall be identified.
   (iii) The department shall estimate the total amount of payment
adjustments under this section that it anticipates will be applicable
to the period July 1, 1996, through September 30, 1996.  The
applicability of the payment adjustment amounts to this period of
time shall be determined in accordance with federal medicaid rules,
including Sections 447.297(d)(3) and 447.298 of Title 42 of the Code
of Federal Regulations.
   (iv) The department shall identify the amount of the final maximum
state disproportionate share hospital allotment for California for
the 1996 federal fiscal year under applicable federal rules.  The
amount identified shall not exceed two billion one hundred ninety-one
million four hundred fifty-one thousand dollars ($2,191,451,000).
   (v) The amounts identified or estimated under clauses (i), (ii),
and (iii) shall be added together, and the sum of these amounts shall
be subtracted from the amount identified under clause (iv).  The
remainder determined from this calculation, or the amount of two
hundred million dollars ($200,000,000), whichever is less, shall be
the maximum amount available for secondary supplemental payment
adjustments under this paragraph.
   (B) The maximum amount available for secondary supplemental
payment adjustments, as identified under clause (v) of subparagraph
(A), shall be distributed to eligible hospitals as follows:
   (i) The total amount of all per diem payment adjustments and
supplemental lump-sum payment adjustments relating to the 1995-96
payment adjustment year, whether paid or payable, shall be identified
for each eligible hospital.  However, notwithstanding any other
provision of law, those hospitals referred to in subparagraph (C)
shall not be included in this step, and shall not receive any
secondary supplemental payment adjustments, as described in
subparagraph (C).
   (ii) For purposes of secondary supplemental payment adjustments,
the eligible hospitals shall be classified into various groups.  No
hospital may qualify for more than one of these groups.
Notwithstanding subclause (II), the hospitals described in
subparagraph (C) shall not be included in any of these groups.  The
following groups of hospitals shall be recognized:
   (I) "State of California hospitals," which shall include all
eligible hospitals that, as of July 1, 1995, were licensed to the
State of California or to the University of California.
   (II) "County hospitals," which shall include all eligible
hospitals that, as of July 1, 1995, were licensed to a county or a
city and county, but shall exclude those hospitals referred to in
subparagraph (C).
   (III) "Other public hospitals," which shall include all eligible
hospitals that, as of July 1, 1995, were licensed to a local hospital
district, a local health authority, a city, or any other noncounty
political subdivision of the state.
   (IV) "Children's hospitals," which shall include all eligible
hospitals that, as of July 1, 1995, were included in the children's
hospital group under subdivision (h).
   (V) "Other nonpublic hospitals," which shall include all eligible
hospitals that are not included in any group described in subclauses
(I) through (IV).
   (iii) The amount determined to be the maximum amount of secondary
supplemental payment adjustments under clause (v) of subparagraph (A)
shall first be allocated among the groups of hospitals referred to
in clause (ii), as follows:
   (I) "State of California hospitals":  64.35 percent of the maximum
amount.
   (II) "County hospitals":  18.095 percent of the maximum amount.
   (III) "Other public hospitals":  0.65 percent of the maximum
amount.
   (IV) "Children's hospitals":  6.755 percent of the maximum amount.

   (V) "Other nonpublic hospitals":  10.15 percent of the maximum
amount.
   (iv) (I) The amount of funds allocated pursuant to clause (iii) to
each of the particular groups of hospitals referred to in clauses
(ii) and (iii) shall then be distributed as secondary supplemental
payment adjustments among the eligible hospitals within each
particular group.  The secondary supplemental distributions shall be
made on a descending pro rata basis within each group.  Each cycle of
the descending pro rata distribution shall be considered to be a
phase of the process.  As described in subclauses (II) to (V),
inclusive, in each phase of the descending pro rata distribution, the
pro rata share of the distribution to each hospital that remains
eligible to receive additional distributions shall be computed based
on the ratio of the total payment adjustments that the particular
hospital has already earned under the payment adjustment program for
the 1995-96 payment adjustment year, as compared to the total payment
adjustments already earned by the other hospitals in the particular
group that remain eligible to receive the additional distributions.
   (II) For the first phase, the total amount of payment adjustments
under this section for the 1995-96 payment adjustment year, including
all per diem payment adjustments and all supplemental lump-sum
payment adjustments, that are determined by the department as already
being paid or payable to each hospital eligible for the distribution
shall be determined.
   (III) The figures determined under subclause (II) for each
hospital in the particular group shall be added together to determine
an aggregate total.
   (IV) The figures determined for each hospital under subclause (II)
shall be divided by the aggregate total determined under subclause
(III), yielding a percentage figure for each hospital.
   (V) The percentage figure determined for each hospital under
subclause (IV) shall be applied to the maximum portion of the funds
allocated to the particular group under clause (iii) that can be
distributed in the particular phase until a hospital in the
particular group reaches the limitation set forth in clause (v).
   (v) For each hospital, no secondary supplemental payment
adjustment shall be paid to the extent that either of the following
conditions exist:
   (I) The secondary supplemental payment adjustment would cause the
total of all payment adjustments to the hospital under this section
relating to the 1995-96 payment adjustment year to exceed the amount
that is the product of multiplying 0.95 times the particular hospital'
s OBRA 1993 payment limitation for the 1995-96 payment adjustment
year, as computed by the department in accordance with applicable
provisions of the Medi-Cal State Plan.
   (II) Without regard to any secondary supplemental payment
adjustment, the hospital has already received or has earned payment
adjustments relating to the 1995-96 payment adjustment year that
equal or exceed the product referred to in subclause (I).
   (vi) Any secondary supplemental payment adjustment amount, or
portion thereof, that otherwise would have been payable to a
particular hospital under this paragraph, but that is barred by the
limitation described in clause (v), shall be distributed by the
department through additional phases of the descending pro rata
distribution process to those hospitals within the same group, as set
forth in clauses (ii) and (iii), as the particular hospital.  For
each additional phase, the mathematical steps referred to in
subclauses (II) to (V), inclusive, of clause (iv) shall be repeated
for those hospitals that have not reached the limitation set forth in
clause (v).  The phases shall continue until the funds allocated to
the particular group under clause (iii) have been fully exhausted.
No such distribution, however, shall be in an amount that would cause
any hospital to exceed the limitation set forth in clause (v).
   (C) Notwithstanding any other provision of law, prior to the
allocation or distribution of any secondary supplemental payment
adjustments, hospitals that, as of July 1, 1995, were part of a
county-operated health system of three or more eligible hospitals
licensed to the county, shall be deemed to have reached the
limitations on total payments described in subclause (II) of clause
(v) of subparagraph (B).  Data regarding payment adjustments earned
by these hospitals with respect to the 1995-96 payment adjustment
year, whether paid or payable, shall be included in the computations
under subparagraph (A), but excluded from the computations under
subparagraph (B).
   (D) The department shall make payments of the secondary
supplemental payment adjustments to hospitals on or before November
30, 1996.
   (10) The final total amount of per diem payment adjustments paid
by the department for the 1995-96 payment adjustment year, plus the
final total amount of supplemental lump-sum payment adjustments and
secondary supplemental payment adjustments paid by the department for
the 1995-96 payment adjustment year, shall be the maximum size of
the payment adjustment program for the 1995-96 payment adjustment
year.
   (11) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.  In doing so, the
department shall comply with any procedures instituted by the Health
Care Financing Administration in connection with Sections 447.297(d)
(3) and 447.298 of Title 42 of the Code of Federal Regulations.
   (z) (1) (A) Notwithstanding any other provision of law (except for
subparagraph (B)), all Medi-Cal days of acute inpatient hospital
service paid by or on behalf of the department that give rise to
payment adjustment amounts with respect to the period October 1,
1994, through June 30, 1995, shall be treated as involving 1.4 days
for purposes of payment adjustments with respect to this period of
time.  As a result, each per diem payment adjustment amount otherwise
payable to the hospital in connection with these days shall be
increased by 40 percent.  The Medi-Cal days in question shall be
treated as involving 1.4 days toward the maximum limit set forth in
paragraph (2) of subdivision (l).  The Medi-Cal days in question
shall be treated as involving 1.0 days for purposes of determining
the hospital's annualized Medi-Cal inpatient paid days for the next
applicable payment adjustment year.
   (B) For the 1994-95 payment adjustment year, no eligible hospital
shall receive total payment adjustments, including per diem payment
adjustment amounts and any supplemental lump-sum payment
                                  adjustment amounts, in excess of
the projected total payment adjustment amounts that were computed or
recomputed, as applicable, for the hospital by the department with
respect to the 1994-95 payment adjustment year.  For each hospital,
this maximum figure shall not exceed the sum of the following two
components:
   (i) The final figure computed by the department as the hospital's
total per diem composite amount (including any applicable adjustments
under subdivision (p)), multiplied by 80 percent of the hospital's
annualized Medi-Cal inpatient paid days.
   (ii) The amount calculated by the department as the hospital's pro
rata share (based on the figures for all hospitals computed under
clause (i)) of the remainder determined by subtracting (I) the sum of
the figures computed for all hospitals under clause (i) from (II)
the final maximum state disproportionate share hospital allotment for
California under applicable federal rules for the 1995 federal
fiscal year.
   (C) Any payment adjustment amount that otherwise would be payable
to a hospital, but that is barred by subparagraph (B), shall be
withheld or recouped by the department and distributed on a
descending pro rata basis as part of the supplemental lump-sum
distribution described in subdivision (w) to those hospitals that
have not reached their maximum figures as described in subparagraph
(B).
   (2) (A) Notwithstanding any other provision of law, except for
subparagraph (B), all Medi-Cal days of acute inpatient hospital
service paid by or on behalf of the department that give rise to
payment adjustment amounts with respect to the period October 1,
1995, through June 30, 1996, shall be treated as involving 1.4 days
for purposes of payment adjustments with respect to this period of
time.  As a result, each per diem payment adjustment amount otherwise
payable to the hospital in connection with these days shall be
increased by 40 percent.  The Medi-Cal days in question shall be
treated as involving 1.4 days toward the maximum limit set forth in
paragraph (2) of subdivision (l).  The Medi-Cal days in question
shall be treated as involving 1.0 days for purposes of determining
the hospital's annualized Medi-Cal inpatient paid days for the next
applicable payment adjustment year.
   (B) For the 1995-96 payment adjustment year, no eligible hospital
shall receive total payment adjustments, including per diem payment
adjustment amounts, supplemental lump-sum payment adjustment amounts,
and secondary supplemental payment adjustments in excess of the
hospital's OBRA 1993 payment limitation as computed by the department
pursuant to the Medi-Cal State Plan.  No hospital shall receive
secondary supplemental payment adjustments to the extent the payment
adjustments would be inconsistent with paragraph (9) of subdivision
(y).
   (C) Any payment adjustment amount that otherwise would be payable
to a hospital, but that is barred by subparagraph (B), shall be
withheld or recouped by the department and thereafter distributed to
other eligible hospitals, refunded to transferors, or otherwise
processed in accordance with this section and Section 14163.
   (3) Notwithstanding any other provision of law, to the extent
necessary or appropriate to implement and administer the amendments
to this section enacted during the 1994 calendar year, the department
may utilize an approach involving interim payments, with
reconciliation to final payments within a reasonable time.
   (aa) (1) For the 1996-97 payment adjustment year, each eligible
hospital that remains in operation as of June 30, 1997, shall also be
eligible to receive a supplemental lump-sum payment adjustment, that
shall be payable as a result of the facility being a
disproportionate share hospital in operation as of that date.  The
availability of supplemental lump-sum payment adjustments under this
paragraph shall be determined by the department as follows:
   (A) The projected total payment adjustment amount for each
hospital, as determined by the department at the outset of the
payment adjustment year, including any reductions arising from
payment limitations under this section, shall be identified.  For
each hospital, this amount shall be identical to the amount that was
used for the same hospital in the calculations made at the outset of
the 1996-97 state fiscal year regarding transfer amounts under
subdivision (h) of Section 14163 for that fiscal year.
   (B) The total amount of all per diem payment adjustment amounts
under this section, whether paid or payable, that are applicable to
the period July 1, 1996, through June 30, 1997, shall be determined
for each hospital.  The applicability of the per diem payment
adjustment amounts to this period of time shall be determined in
accordance with federal medicaid rules including Sections 447.297(d)
(3) and 447.298 of Title 42 of the Code of Federal Regulations.
   (C) The amount determined under subparagraph (B) for each hospital
shall be subtracted from the amount identified under subparagraph
(A) for each hospital.  If the remainder is a positive figure for the
particular hospital, the supplemental lump-sum payment adjustment
for the hospital shall be the positive remainder amount, which shall
be payable because the facility is a disproportionate share hospital
in operation as of June 30, 1997.
   (D) The department shall make interim and final payments of the
supplemental lump-sum payment adjustments under this paragraph on or
before September 30, 1997.
   (2) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.  In doing so, the
department shall comply with any procedures instituted by the Health
Care Financing Administration in connection with Sections 447.297(d)
(3) and 447.298 of Title 42 of the Code of Federal Regulations.
   (ab) (1) For the 1997-98 payment adjustment year,  eligible
hospitals that meet the requirements of this subdivision and that
remain in operation as of September 30, 1997, shall be eligible to
receive a special supplemental payment adjustment, which shall be
payable as a result of the facility being a disproportionate share
hospital in operation as of that date.  For purposes of federal
medicaid rules, including Section 447.297(d) of Title 42 of the Code
of Federal Regulations, the special supplemental payment adjustments
shall be applicable to the federal fiscal year that ends on September
30, 1997.
   (2) The availability of special supplemental payment adjustments
under this subdivision shall be determined as follows:
   (A) The final maximum state disproportionate share hospital
allotment for California under the provisions of applicable federal
medicaid rules shall be identified for the 1997 federal fiscal year.

   (B) The total amount of all per diem payment adjustment amounts
and supplemental payment adjustments under this section (exclusive of
any payments under this subdivision) applicable to the 1997 federal
fiscal year, whether paid or payable, shall be determined.  The
applicability of per diem payment adjustment amounts and supplemental
payment adjustments of all types to the 1997 federal fiscal year
shall be determined in accordance with federal medicaid rules,
including Sections 447.297(d)(3) and 447.298 of Title 42 of the Code
of Federal Regulations.
   (C) The figure determined under subparagraph (B) shall be
subtracted from the figure identified under subparagraph (A).  If the
remainder is a positive figure, special supplemental payment
adjustments shall be made under this subdivision in accordance with
paragraph (3).  The positive remainder shall be the maximum amount of
special supplemental payment adjustments under this subdivision.
   (3) (A) For purposes of these special supplemental  payment
adjustments, only hospitals that can be categorized into either of
the two groups specified in clauses (i) and (ii) shall be eligible to
receive the supplemental payment adjustments, and no hospital may
qualify for more than one of the two groups.  The following groups of
hospitals shall be recognized:
   (i) "Public hospitals," which shall include all eligible hospitals
that, as of July 1, 1997, met the definition of a public hospital.
   (ii) "Nonpublic hospitals," which shall include all eligible
hospitals that, as of July 1, 1997, met the definition of a nonpublic
hospital.
   (B) The amount determined to be the maximum amount of special
supplemental payment adjustments under subparagraph (C) of paragraph
(2) shall first be allocated between the two groups of hospitals
referred to in subparagraph (A) as follows:
   (i) "Public hospitals":  74.885 percent of the maximum amount.
   (ii) "Nonpublic hospitals":  25.115 percent of the maximum amount.

   (C) The amount of funds allocated pursuant to subparagraph (B) to
each of the particular groups of hospitals referred to in
subparagraphs (A) and (B) shall then be distributed as special
supplemental payment adjustments among the eligible hospitals within
each particular group as follows:
   (i) The department shall compute the projected total payment
adjustment amounts for all eligible hospitals for the 1997-98 payment
adjustment year, exclusive of any payments under this subdivision,
subdivision (ad), or subdivision (af), by determining for each
eligible hospital its total per diem composite amount and multiplying
that figure by the maximum number of the hospital's Medi-Cal
inpatient paid days determined under paragraph (2) of subdivision
(l).  For purposes of this clause, the determinations shall be
without regard to the OBRA 1993 payment limitations.
   (ii) The amount computed under clause (i) for each hospital
described in subparagraph (A) shall be compared to the amount that is
the product of multiplying 0.95 times the OBRA 1993 payment
limitation that, in accordance with applicable provisions of the
Medi-Cal State Plan, the department has computed for the particular
hospital for the 1997-98 payment adjustment year.
   (iii) Where the amount computed under clause (i) for the
particular hospital is equal to or exceeds the product computed for
the hospital under clause (ii), the hospital shall not receive a
special supplemental payment adjustment.  Data regarding hospitals
that have reached this limitation shall not be used for purposes of
clauses (v) through (viii).
   (iv) Where the amount computed under clause (i) for the particular
hospital is less than the product computed for the hospital under
clause (ii), the amount computed under clause (i) for the hospital
shall be used for purposes of clauses (v) through (viii).
   (v) The figures determined under clause (iv) for each hospital in
the particular group shall be added together to determine an
aggregate total for each group.
   (vi) The figures determined for each hospital under clause (iv)
shall be divided by the aggregate total determined under clause (v)
for the particular group, yielding a percentage figure for each
hospital.
   (vii) The percentage figure determined for each hospital under
clause (vi) shall be applied to the maximum portion of the funds
allocated to the particular group under subparagraph (B), to
determine the hospital's pro rata share of the special supplemental
lump-sum payment adjustments.  Except, however, in the case of a
nonpublic hospital that, as of July 1, 1997, meets the definition of
a children's hospital, such pro rata share otherwise determined shall
be multiplied by a factor of 1.09, yielding a modified pro rata
share.  The pro rata share for the other nonpublic hospitals shall be
reduced accordingly, yielding a modified pro rata share, so that the
maximum portion of the funds allocated to the nonpublic hospitals
group will not be exceeded.  The pro rata share or modified pro rata
share, as applicable, for each hospital, as computed under this
clause, shall also be used for all purposes relating to descending
pro rata distributions under clause (viii).
   (viii) In no event shall a hospital receive special supplemental
payment adjustment amounts in excess of the difference between the
product computed for the hospital under clause (ii) and the amount
computed for the hospital under clause (i).  Any special supplemental
payment adjustment amount, or portion thereof, that otherwise would
have been payable under this paragraph to a hospital, but that is
barred by this limitation, shall be distributed on a descending pro
rata basis to those hospitals within the same group.
   (D) The department shall make interim and final payments of the
special supplemental payment adjustments to hospitals on or before
February 28, 1998.
   (4) The department shall implement this subdivision only if
consistent with federal medicaid law and the Medi-Cal State Plan, and
only  if the department determines that federal financial
participation is available.
   (ac) Notwithstanding any other provision of law, the payment
adjustment program with respect to the period October 1, 1997 through
June 30, 1998, shall be structured as set forth below and in
subdivisions (ad) and (af).  However, if the effective date of the
Medi-Cal State Plan amendment relating to this subdivision is later
than October 1, 1997, as approved by the federal Health Care
Financing Administration, all references in this subdivision to the
period October 1, 1997, through June 30, 1998, shall be references to
the period that commences on that effective date and continues
through June 30, 1998.
   (1) (A) The department shall utilize the computations made
pursuant to clause (i) of subparagraph (C) of paragraph (3) of
subdivision (ab) of the projected total payment adjustment amounts
for all eligible hospitals for the entire 1997-98 payment adjustment
year, exclusive of any supplemental payments under subdivision (ab),
(ad), or (af).
   (B) The computed amount referred to in subparagraph (A) for each
hospital shall be compared to the OBRA 1993 payment limitation that,
in accordance with applicable provisions of the Medi-Cal State Plan,
the department has computed for the particular hospital.
   (C) Where the computed amount referred to in subparagraph (A) for
the particular hospital exceeds the OBRA 1993 payment limitation for
the hospital, the amount computed under subparagraph (A) shall be
reduced to an amount equal to the OBRA 1993 payment limitation for
the particular hospital.  The amount so reduced shall be used for
purposes of subparagraph (E).
   (D) Where the computed amount referred to in subparagraph (A) for
the particular hospital is equal to or less than the OBRA 1993
payment limitation for the hospital, the computed amount referred to
in subparagraph (A) shall be used for purposes of subparagraph (E).
   (E) The amounts determined under subparagraphs (C) and (D) for all
eligible hospitals shall be added together, yielding an aggregate
sum.  The aggregate sum shall be the unadjusted projected total
payment adjustment program for the entire 1997-98 payment adjustment
year, exclusive of any supplemental payments under subdivision (ab)
or (ad).
   (2) The initial maximum size of the payment adjustment program for
the entire 1997-98 payment adjustment year shall be set at one
billion seven hundred fifty million dollars ($1,750,000,000),
exclusive of any supplemental payments under subdivision (ab) or
(ad).
   (3) The department shall increase or decrease the amount
determined for each eligible hospital under subparagraph (C) or (D)
of paragraph (1), as applicable, by multiplying the amount by an
identical percentage, yielding the hospital's tentative adjusted
projected total payment adjustment amount for the 1997-98 payment
adjustment year.  The identical percentage figure to be used for this
purpose shall be that percentage that is derived by dividing the
amount set forth in paragraph (2) by the aggregate sum determined
under subparagraph (E) of paragraph (1).  Except, however, the amount
determined for a hospital under subparagraph (C) or (D) of paragraph
(l) shall not be increased if it would exceed the OBRA 1993 payment
limitation for the hospital.
   (4) The tentative adjusted projected total payment adjustment
amount computed for each eligible hospital under paragraph (3) shall
be further adjusted as follows:
   (A) (i) For each eligible hospital that met the definition of a
nonpublic-converted hospital as of July 1, 1997, the hospital's
tentative adjusted projected total payment adjustment amount shall be
multiplied by a "nonpublic-converted hospital adjustment factor."
The applicable adjustment factor shall be that which is necessary to
result in an amount, for each hospital, equal to the amount used for
the particular hospital under subparagraph (E) of paragraph (1).  The
amount so adjusted shall be used for purposes of clause (iii).
   (ii) The total amount of all per diem payment adjustment amounts
under this section, whether paid or payable, applicable to the period
July 1, 1997, through September 30, 1997, shall be determined for
each hospital referred to in clause (i).  The applicability of the
per diem payment adjustment amounts to the period July 1, 1997,
through September 30, 1997, shall be determined in accordance with
federal medicaid rules, including Sections 447.297(d)(3) and 447.298
of Title 42 of the Code of Federal Regulations.  However, if the
effective date of the Medi-Cal State Plan amendment relating to this
subdivision is later than October 1, 1997, as approved by the federal
Health Care Financing Administration, all determinations under this
clause shall include per diem payment adjustment amounts applicable
to the period July 1, 1997, through the date that is one day prior to
that effective date.
   (iii) The amount determined for each hospital under clause (i)
shall be reduced by the amount determined under clause (ii) for the
hospital.  The resulting figure shall be the final adjusted projected
total payment adjustment amount for the hospital for the period
October 1, 1997, through June 30, 1998, which shall be paid to the
hospital in accordance with paragraph (5).
   (B) (i) For each eligible hospital that met the definition of a
nonpublic hospital as of July 1, 1997, the hospital's tentative
adjusted projected total payment adjustment amount shall be
multiplied by a "nonpublic hospital adjustment factor."  The
applicable adjustment factor shall be derived as follows:
   (I) The tentative adjusted projected total payment adjustment
amounts determined under paragraph (3) for each nonpublic hospital
described above shall be added together.
   (II) The amount identified in paragraph (2) shall be divided by
2.38.  The resulting figure shall then be reduced by the sum of the
amounts determined for all nonpublic-converted hospitals under
clauses (ii) and (iii) of subparagraph (A).
   (III) The amount computed under subclause (II) shall be divided by
2, and the result thereof further reduced by the amount of
thirty-seven million five hundred thousand dollars ($37,500,000).
   (IV) The applicable adjustment factor shall be that ratio that
results from dividing the amount derived in subclause (III) by the
amount derived in subclause (I).
   (ii) The total amount of all per diem payment adjustment amounts
under this section, whether paid or payable, applicable to the period
July 1, 1997, through September 30, 1997, shall be determined for
each hospital referred to in clause (i).  The applicability of the
per diem payment adjustment amounts to the period July 1, 1997,
through September 30, 1997, shall be determined in accordance with
federal medicaid rules including Sections 447.297(d)(3) and 447.298
of Title 42 of the Code of Federal Regulations.  However, if the
effective date of the Medi-Cal State Plan amendment relating to this
subdivision is later than October 1, 1997, as approved by the federal
Health Care Financing Administration, all determinations under this
clause shall include per diem payment adjustment amounts applicable
to the period July 1, 1997, through the date that is one day prior to
that effective date.
   (iii) The amount determined for each hospital under clause (i)
shall be reduced by the amount determined under clause (ii) for the
hospital.  The resulting figure shall be the final adjusted projected
total payment adjustment amount for the hospital for the period
October 1, 1997, through June 30, 1998, which shall be paid to the
hospital in accordance with paragraph (5).
   (C) (i) For each eligible hospital that met the definition of a
public hospital as of July 1, 1997, the hospital's tentative adjusted
projected total payment adjustment amount shall be multiplied by a
"public hospital adjustment factor."  The  applicable adjustment
factor shall be derived as follows:
   (I) The tentative adjusted projected total payment adjustment
amounts determined under paragraph (3) for each public hospital
described above shall be added together.
   (II) The amount identified in paragraph (2) shall be reduced by
the sum of the amounts determined for all nonpublic-converted
hospitals under clauses (ii) and (iii) of subparagraph (A) and the
sum of the amounts determined for all nonpublic hospitals under
clauses (ii) and (iii) of subparagraph (B).
   (III) The applicable adjustment factor shall be that ratio that
results from dividing the amount derived in subclause (II) by the
amount derived in subclause (I).
   (ii) The total amount of all per diem payment adjustment amounts
under this section, whether paid or payable, applicable to the period
July 1, 1997, through September 30, 1997, shall be determined for
each hospital referred to in clause (i).  The applicability of the
per diem payment adjustment amounts to the period July 1, 1997,
through September 30, 1997, shall be determined in accordance with
federal medicaid rules, including Sections 447.297(d)(3) and 447.298
of Title 42 of the Code of Federal Regulations.  However, if the
effective date of the Medi-Cal State Plan amendment relating to this
subdivision is later than October 1, 1997, as approved by the federal
Health Care Financing Administration, all determinations under this
clause shall include per diem payment adjustment amounts applicable
to the period July 1, 1997, through the date that is one day prior to
that effective date.
   (iii) The amount determined for each hospital under clause (i)
shall be reduced by the amount determined under clause (ii) for the
hospital.  The resulting figure shall be the final adjusted projected
total payment adjustment amount for the hospital for the period
October 1, 1997, through June 30, 1998, which shall be paid to the
hospital in accordance with paragraph (5).
   (5) The final adjusted projected total payment adjustment amount
determined for each eligible hospital for the period October 1, 1997,
through June 30, 1998, shall be distributed in 16 or fewer equal
installments to be paid no later than the 10th and 25th day of each
month  during the period that commences on the effective date of the
Medi-Cal State Plan amendment relating to this subdivision, as
approved by the federal Health Care Financing Administration, and
continues through May 25, 1998.
   (6) Notwithstanding any other provision of law, for the entire
1997-98 payment adjustment year, no eligible hospital shall receive
total payment adjustments, including per diem payment adjustments,
payments under this subdivision, and any supplemental payments under
subdivision (ab) or (ad), in excess of the hospital's OBRA 1993
payment limitation as computed by the department pursuant to the
Medi-Cal State Plan.  No hospital shall receive any special
supplemental payment adjustments or supplemental lump-sum payment
adjustments to the extent the payments would be inconsistent with
subdivision (ab) or (ad), respectively.
   (7) The aggregate sum of the final adjusted projected total
payment adjustment amounts computed under paragraph (4) for each
eligible hospital for the period October 1, 1997, through June 30,
1998, plus the aggregate sum of the amounts determined for each
eligible hospital under clause (ii) of subparagraph (A) of paragraph
(4), clause (ii) of subparagraph (B) of paragraph (4) and clause (ii)
of subparagraph (C) of paragraph (4), shall be the maximum size of
the payment adjustment program for the entire 1997-98 payment
adjustment year, exclusive of the special supplemental payment
adjustments provided for under subdivision (ab) and the supplemental
lump-sum payment adjustments provided for under subdivision (ad).
   (8) The department shall implement this subdivision only if
consistent with federal medicaid law and the Medi-Cal State Plan, and
only  if the department determines that federal financial
participation is available.
   (ad) (1) for the 1997-98 payment adjustment year,  eligible
hospitals that meet the requirements of this subdivision and that
remain in operation as of June 30, 1998, shall be eligible to receive
a supplemental lump-sum payment adjustment, which shall be payable
as a result of the facility being a disproportionate share hospital
in operation as of that date, but only if the hospital has remained
in operation for the period October 1, 1997, to June 30, 1998,
inclusive.
   (2) The amount of supplemental lump-sum payment adjustments
available to hospitals under this subdivision shall be four hundred
five million dollars ($405,000,000).
   (3) (A) For purposes of these supplemental lump-sum payment
adjustments,  only hospitals that can be categorized into either of
the two groups specified in clauses (i) and (ii) shall be eligible to
receive the supplemental payment adjustments, and no hospital may
qualify for more than one of the two groups.  The following groups of
hospitals shall be recognized:
   (i) "Public hospitals," which shall include all eligible hospitals
that, as of July 1, 1997, met the definition of a public hospital.
   (ii) "Nonpublic hospitals," which shall include all eligible
hospitals that, as of July 1, 1997, met the definition of a nonpublic
hospital.
   (B) The amount of supplemental lump-sum payment adjustments as
referred to in paragraph (2) shall first be allocated between the two
groups of hospitals referred to in subparagraph (A) as follows:
   (i) "Public hospitals":  72.17 percent of the amount.
   (ii) "Nonpublic hospitals":  27.83 percent of the amount.
   (C) The amount of funds allocated pursuant to subparagraph (B) to
each of the particular groups of hospitals referred to in
subparagraphs (A) and (B) shall then be distributed as supplemental
lump-sum payment adjustments among the eligible hospitals within each
particular group as follows:
                                     (i) The department shall
identify for each eligible hospital the total amount of payment
adjustments under this section (exclusive of any payments under this
subdivision and subdivision (af)) applicable to the 1997-98 payment
adjustment year, whether paid or payable.  The applicability of the
payment adjustment amounts to this period of time shall be determined
in accordance with federal medicaid rules, including Sections
447.297(d)(3) and 447.298 of Title 42 of the Code of Federal
Regulations.
   (ii) The amount identified for each hospital under clause (i)
shall be compared to the OBRA 1993 payment limitation that, in
accordance with applicable provisions of the Medi-Cal State Plan, the
department has computed for the particular hospital for the 1997-98
payment adjustment year.
   (iii) Where the amount computed under clause (i) for the
particular hospital is equal to or exceeds the OBRA 1993 payment
limitation for the hospital, the hospital shall not receive a
supplemental lump-sum payment adjustment.  Data regarding hospitals
that have reached this limitation shall not be used for purposes of
clauses (v) through (viii).
   (iv) Where the amount computed under clause (i) for the particular
hospital is less than the OBRA 1993 payment limitation for the
hospital, the amount computed under clause (i) minus that amount paid
or payable to the hospital under subdivision (ab) shall be used for
purposes of clauses (v) through (viii).
   (v) The figures determined under clause (iv) for each hospital in
the particular group shall be added together to determine an
aggregate total for each group.
   (vi) The figures determined for each hospital under clause (iv)
shall be divided by the aggregate total determined under clause (v)
for the particular group, yielding a percentage figure for each
hospital.
   (vii) The percentage figure determined for each hospital under
clause (vi) shall be applied to the maximum portion of the funds
allocated to the particular group under subparagraph (B), to
determine the hospital's pro rata share of the supplemental lump-sum
payment adjustments.  Except, however, in the case of a nonpublic
hospital that, as of July 1, 1997, meets the definition of a children'
s hospital, the pro rata share otherwise determined shall be
multiplied by a factor of 1.09, yielding a modified pro rata share.
The pro rata share for the other nonpublic hospitals shall be reduced
accordingly, yielding a modified pro rata share, so that the maximum
portion of the funds allocated to the nonpublic hospitals group will
not be exceeded.  The pro rata share or modified pro rata share, as
applicable, for each hospital, as computed under this clause, shall
also be used for all purposes relating to descending pro rata
distributions under clause (viii).
   (viii) In no event shall a hospital receive supplemental lump-sum
payment adjustment amounts in excess of the difference between the
OBRA 1993 payment limitation for the hospital and the amount computed
for the hospital under clause (i).  Any supplemental lump-sum
payment adjustment amount, or portion thereof, that otherwise would
have been payable under this paragraph to a hospital, but that is
barred by this limitation, shall be distributed on a descending pro
rata basis to those hospitals within the same group.
   (D) The department shall make interim and final payments of the
supplemental lump-sum payment adjustments to hospitals on or before
August 15, 1998.
   (4) The department shall implement this subdivision only if
consistent with federal medicaid law and the Medi-Cal State Plan, and
only if the department determines that federal financial
participation is available.
   (5) Notwithstanding any other provision of law, the payment
adjustments, data, and related aspects of subdivision (af) shall not
be taken into account for any purpose under this subdivision,
subdivision (ab), or subdivision (ac).
   (ae) (1) In the event that any provision of subdivision (ab),
(ac), or (ad), as reflected in a proposed Medi-Cal State Plan
amendment, is not approved by the federal Health Care Financing
Administration, the director shall modify the proposed Medi-Cal State
Plan amendment in a manner intended to be consistent with all
applicable federal requirements.  Subject to the requirements of
federal law, in developing the modified proposed Medi-Cal State Plan
amendment, the director shall, to the extent practicable,
incorporate, implement, and modify, as necessary, the payment
methodologies applicable to the 1997-98 payment adjustment year in a
manner that is as consistent as possible with the approach and intent
of subdivisions (ab), (ac), and (ad), respectively.
   (2) In the event that any provision of subdivision (af), (ag),
(ah), (ai), (aj), or (ak), as reflected in a proposed Medi-Cal State
Plan amendment, is not approved by the federal Health Care Financing
Administration, the director shall modify that proposed Medi-Cal
State Plan amendment in a manner intended to be consistent with all
applicable federal requirements.  Subject to the requirements of
federal law, in developing the modified proposed Medi-Cal State Plan
amendment, the director shall, to the extent practicable,
incorporate, implement, and modify, as necessary, the payment
methodologies applicable to the 1997-98, 1998-99, 1999-2000 and
2000-01 payment adjustment years in a manner that is as consistent as
possible with the approach and intent of subdivisions (af), (ag),
(ah), (ai), (aj), and (ak), respectively.
   (af) (1) The provisions of this subdivision shall apply for the
1997-98 payment adjustment year, and, for all purposes under the
program, shall be implemented subsequent to the provisions of
subdivisions (ab), (ac), and (ad).  Under this subdivision, eligible
hospitals that, as of October 1, 1997, were part of a county-operated
health system of three or more eligible hospitals licensed to the
county, and that are in operation as of June 30, 1998, shall be
eligible to receive an additional supplemental lump-sum payment
adjustment, which shall be payable as a result of the facility being
a disproportionate share hospital in operation as of that date, but
only if the hospital has remained in operation for the period October
1, 1997, through June 30, 1998.
   (2) The maximum amount of additional supplemental lump-sum payment
adjustments under this subdivision shall be one hundred sixty-six
million dollars ($166,000,000).
   (3) The maximum amount of funds specified under paragraph (2)
shall be distributed as additional supplemental lump-sum payment
adjustments among the hospitals eligible under this subdivision as
follows:
   (A) The department shall identify for each eligible hospital the
total amount of payment adjustments under this section (exclusive of
any payments under this subdivision) applicable to the 1997-98
payment adjustment year, whether paid or payable.  The applicability
of the payment adjustment amounts to this period of time shall be
determined in accordance with federal medicaid rules, including
Sections 447.297(d)(3) and 447.298 of Title 42 of the Code of Federal
Regulations.
   (B) The amount identified for each hospital under subparagraph (A)
shall be compared to the OBRA 1993 payment limitation that, in
accordance with applicable provisions of the Medi-Cal State Plan, the
department has computed for the particular hospital for the 1997-98
payment adjustment year.
   (C) Where the amount computed under subparagraph (A) for the
particular hospital is equal to or exceeds the OBRA 1993 payment
limitation for the hospital, the hospital shall not receive an
additional supplemental lump-sum payment adjustment.  Data regarding
hospitals that have reached this limitation shall not be used for
purposes of subparagraphs (E) through (H).
   (D) Where the amount computed under subparagraph (A) for the
particular hospital is less than the OBRA 1993 payment limitation for
the hospital, the amount computed under subparagraph (A) shall be
used for purposes of subparagraphs (E) through (H).
   (E) The figures determined under subparagraph (D) for each
hospital eligible to receive additional supplemental lump-sum payment
adjustments under this subdivision shall be added together to
determine an aggregate total.
   (F) The figures determined for each hospital under subparagraph
(D) shall be divided by the aggregate total determined under
subparagraph (E), yielding a percentage figure for each hospital.
   (G) The percentage figure determined for each hospital under
subparagraph (F) shall be applied to the maximum amount specified in
paragraph (2), to determine the hospital's pro rata share of the
additional supplemental lump-sum payment adjustments.
   (H) In no event shall a hospital receive additional supplemental
lump-sum payment adjustment amounts in excess of the difference
between the OBRA 1993 payment limitation for the hospital and the
amount computed for the hospital under subparagraph (A).  Any
additional supplemental lump-sum payment adjustment amount, or
portion thereof, that otherwise would have been payable under this
paragraph to a hospital, but that is barred by this limitation, shall
be distributed on a descending pro rata basis to those hospitals
eligible for distributions under this subdivision that have not
reached their OBRA 1993 payment limitation.
   (4) The department shall make interim and final payments of the
additional supplemental lump-sum payment adjustments to hospitals on
or before August 15, 1998.
   (5) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.
   (ag) Notwithstanding any other provision of law, the payment
adjustment program for the 1998-99 payment adjustment year shall be
structured as set forth below and in subdivision (ah).
   (1) (A) The department shall compute the projected total payment
adjustment amounts for all eligible hospitals for the 1998-99 payment
adjustment year by determining for each eligible hospital its total
per diem composite amount and multiplying that figure by the maximum
number of the hospital's Medi-Cal inpatient paid days determined
under paragraph (2) of subdivision (l).  For purposes of this
subparagraph, these determinations shall be without regard to the
OBRA 1993 payment limitations.  With respect to a public hospital
that, as of July 1, 1998, is part of a county-operated health system
of three or more eligible hospitals licensed to the county, the
projected total payment adjustment amount shall be reduced by an
amount equal to the amount paid or payable to the hospital under
subdivision (af).
   (B) The computed amount referred to in subparagraph (A) for each
hospital shall be compared to the OBRA 1993 payment limitation that,
in accordance with applicable provisions of the Medi-Cal State Plan,
the department has computed for the particular hospital.
   (C) Where the computed amount referred to in subparagraph (A) for
the particular hospital exceeds the OBRA 1993 payment limitation for
the hospital, the amount computed under subparagraph (A) shall be
reduced to an amount equal to the OBRA 1993 payment limitation for
the particular hospital.  The amount so reduced shall be used for
purposes of subparagraph (E).  Except, however, with respect to a
public hospital that, as of July 1, 1998, is part of a
county-operated health system of three or more eligible hospitals
licensed to the county, the amount as so reduced shall be increased
by an amount equal to the amount paid or payable to the hospital
under subdivision (af), and used for purposes of subparagraph (E).
   (D) Where the computed amount referred to in subparagraph (A) for
the particular hospital is equal to or less than the OBRA 1993
payment limitation for the hospital, the computed amount referred to
in subparagraph (A) shall be used for purposes of subparagraph (E).
Except, however, with respect to a public hospital that, as of July
1, 1998, is part of a county-operated health system of three or more
eligible hospitals licensed to the county, the computed amount shall
be increased by an amount equal to the amount paid or payable to the
hospital under subdivision (af), and used for purposes of
subparagraph (E).
   (E) The amounts determined under subparagraphs (C) and (D) for all
eligible hospitals shall be added together, yielding an aggregate
sum.  The aggregate sum shall be the unadjusted projected total
payment adjustment program for the 1998-99 payment adjustment year,
exclusive of any supplemental payment adjustments under subdivision
(ah).
   (2) The initial maximum size of the payment adjustment program for
the 1998-99 payment adjustment program shall be set at one billion
seven hundred fifty million dollars ($1,750,000,000), exclusive of
any supplemental payment adjustments under subdivision (ah).
   (3) (A) The department shall increase or decrease the amount
determined for each eligible hospital under subparagraph (C) or (D)
of paragraph (1), as applicable, by multiplying the amount by an
identical percentage, yielding the hospital's tentative adjusted
projected total payment adjustment amount for the 1998-99 payment
adjustment year.  The identical percentage figure to be used for this
purpose shall be that percentage that is derived by dividing the
amount set forth in paragraph (2) by the aggregate sum determined
under subparagraph (E) of paragraph (1).  Except, however, the amount
determined for a hospital under subparagraph (C) or (D) of paragraph
(1), as applicable, shall not be increased so that it would exceed
the OBRA 1993 payment limitation for the hospital, and, where that
would otherwise occur, the remaining amount that would have been
allocated to the particular hospital shall be reallocated to all
other hospitals (that have not reached their OBRA 1993 payment
limitation) on a pro rata basis so that the aggregate sum of the
tentative adjusted projected total payment adjustment amounts for all
hospitals equals the amount set forth in paragraph (2).
   (B) (i) With respect to a public hospital that, as of July 1,
1998, is part of a county-operated health system of three or more
eligible hospitals licensed to the county, the amount determined
under subparagraph (C) or (D) of paragraph (1), as applicable, shall
be reduced by an amount equal to the amount paid or payable to the
hospital under subdivision (af), prior to applying the OBRA 1993
payment limitation under subparagraph (A).
   (ii) Notwithstanding clause (i), all other computations under
subparagraph (A), including the determination of the hospital's pro
rata share of any reallocations, shall be made as though the
reduction described in clause (i) had not occurred.
   (4) The tentative adjusted projected total payment adjustment
amount computed for each eligible hospital under paragraph (3) shall
be further adjusted as follows:
   (A) (i) For each eligible hospital that meets the definition of a
nonpublic-converted hospital as of July 1, 1998, the hospital's
tentative adjusted projected total payment adjustment amount shall be
multiplied by a "nonpublic-converted hospital adjustment factor."
The applicable adjustment factor shall be that which is necessary to
result for each such hospital in an amount equal to the amount used
for the particular hospital under subparagraph (E) of paragraph (1).

   (ii) The resulting product shall be the final adjusted projected
total payment adjustment amount for the hospital for the 1998-99
payment adjustment year, which shall be paid to the hospital in
accordance with paragraph (5).
   (B) (i) For each eligible hospital that meets the definition of a
converted hospital as of July 1, 1998, the hospital's tentative
adjusted projected total payment adjustment amount shall be
multiplied by a "converted hospital adjustment factor."  The
applicable adjustment factor shall be that which is necessary to
result for each such hospital in an amount equal to:  (I) the maximum
number of the hospital's annualized Medi-Cal inpatient paid days
determined under paragraph (2) of subdivision (l); multiplied by (II)
the total per diem composite amount determined for the hospital, the
calculation of the per diem composite amount being restricted by a
maximum low-income number of 40 percent for the hospital, regardless
if the hospital's low-income number would otherwise be higher.  In no
case shall the product of this calculation exceed the amount used
for the particular hospital under subparagraph (E) of paragraph (1).

   (ii) The resulting product shall be the final adjusted projected
total payment adjustment amount for the hospital for the 1998-99
payment adjustment year, which shall be paid to the hospital in
accordance with paragraph (5).
   (C) (i) For each eligible hospital that meets the definition of a
nonpublic hospital as of July 1, 1998, the hospital's tentative
adjusted projected total payment adjustment amount shall be
multiplied by a "nonpublic hospital adjustment factor."  The
applicable adjustment factor shall be derived as follows:
   (I) The tentative adjusted projected total payment adjustment
amounts determined under paragraph (3) for each nonpublic hospital
described above shall be added together.
   (II) The amount identified in paragraph (2) shall be divided by
2.347.  The resulting figure shall then be reduced by the sum of the
amounts determined for all nonpublic-converted hospitals under clause
(ii) of subparagraph (A) and the amounts determined for all
converted hospitals under clause (ii) of subparagraph (B).
   (III) The amount computed under subclause (II) shall be divided by
2, and the result thereof further reduced by the amount of
thirty-seven million five hundred thousand dollars ($37,500,000).
   (IV) The applicable adjustment factor shall be that ratio that
results from dividing the amount derived in subclause (III) by the
amount derived in subclause (I).
   (ii) The resulting product shall be the final adjusted projected
total payment adjustment amount for the hospital for the 1998-99
payment adjustment year, which shall be paid to the hospital in
accordance with paragraph (5).  Except, however, in no case shall the
final adjusted projected total payment adjustment amount exceed the
hospital's OBRA 1993 payment limitation, and, where that would
otherwise occur, the remaining amount that would have been allocated
to the particular hospital shall be reallocated to all other
nonpublic hospitals (that have not reached their OBRA 1993 payment
limitation) on a pro rata basis so that the aggregate sum of the
final adjusted projected total payment adjustment amounts for all
nonpublic hospitals equals the amount derived in subclause (III) of
clause (i).
   (D) (i) For each eligible hospital that meets the definition of a
public hospital as of July 1, 1998, the hospital's tentative adjusted
projected total payment adjustment amount shall be multiplied by a
"public hospital adjustment factor."  The applicable adjustment
factor shall be derived as follows:
   (I) The tentative adjusted projected total payment adjustment
amounts determined under paragraph (3) for each public hospital
described above shall be added together.
   (II) The amount identified in paragraph (2) shall be reduced by
the sum of the amounts determined for all nonpublic-converted
hospitals under clause (ii) of subparagraph (A), the amounts
determined for all converted hospitals under clause (ii) of
subparagraph (B) and the amounts determined for all nonpublic
hospitals under clause (ii) of subparagraph (C).
   (III) The applicable adjustment factor shall be that ratio that
results from dividing the amount derived in subclause (II) by the
amount derived in subclause (I).
   (ii) The product determined for each hospital under clause (i)
shall be further adjusted as follows:
   (I) The product shall be reduced as necessary so as not to exceed
the hospital's OBRA 1993 payment limitation.
   (II) With respect to a public hospital that, as of July 1, 1998,
is part of a county-operated health system of three or more eligible
hospitals licensed to the county, the product shall, prior to the
application of subclause (I), be reduced by an amount equal to the
amount paid or payable to the hospital under subdivision (af).
   (III) Any amounts that would otherwise have been allocated to a
hospital but for the hospital's OBRA 1993 payment limitation as
applied under subclause (I) shall be reallocated to all other public
hospitals (that have not reached their OBRA 1993 payment limitation)
on a pro rata basis.  With respect to a public hospital described in
subclause (II), the hospital's pro rata share of any reallocated
amounts shall be based on the product derived for the hospital under
clause (i).
   (IV) The amount determined for each hospital pursuant to subclause
(I) and subclause (II), as applicable (including the reduction under
subclause (II)), plus any reallocations to the hospital under
subclause (III), shall be the final adjusted projected total payment
adjustment amount for the hospital for the 1998-99 payment adjustment
year, which shall be paid to the hospital in accordance with
paragraph (5).
   (5) The final adjusted projected total payment adjustment amount
determined for each eligible hospital for the 1998-99 payment
adjustment year shall be distributed as set forth below.
   (A) With respect to the period July 1, 1998, through September 30,
1998, payment adjustment amounts shall be payable only to those
eligible hospitals that, as of July 1, 1998, were not part of a
county-operated health system of three or more eligible hospitals
licensed to the county.
   (i) The maximum amount of payment adjustments payable to eligible
hospitals under this paragraph for the period of July 1, 1998,
through September 30, 1998, shall be determined as follows:
   (I) The maximum state disproportionate share hospitals allotment
for California under the provisions of applicable federal medicaid
rules shall be identified for the 1998 federal fiscal year.  This
maximum allotment is two billion one hundred seventeen million eight
hundred ninety-nine thousand six hundred sixty-eight dollars
($2,117,899,668).
   (II) The total amount of all payment adjustments under this
section (exclusive of any payments under this subparagraph)
applicable to the 1998 federal fiscal year, whether paid or payable,
shall be determined.  The applicability of payment adjustment amounts
to the 1998 federal fiscal year shall be determined in accordance
with federal medicaid rules, including Sections 447.297(d)(3) and
447.298 of Title 42 of the Code of Federal Regulations.
   (III) The figure determined under subclause (II) shall be
subtracted from the figure identified under subclause (I).  The
positive remainder shall be the maximum amount of payment adjustments
payable with respect to the period July 1, 1998, through September
30, 1998, under this subparagraph.
   (ii) With respect to an eligible hospital that, as of July 1,
1998, meets the definition of a nonpublic-converted hospital, the
maximum amount payable for the period July 1, 1998, through September
30, 1998, shall be equal to the product of the final adjusted
projected total payment adjustment amount determined for the hospital
pursuant to paragraph (4), multiplied by a fraction that is computed
as follows:
   (I) The maximum amount derived in subclause (III) of clause (i)
shall be increased by an amount equal to the total amount of payment
adjustments paid or payable under subdivision (af).
   (II) The figure derived in subclause (I) shall be divided by the
amount specified in paragraph (2).
   (iii) With respect to an eligible hospital that, as of July 1,
1998, meets the definition of a converted hospital, the maximum
amount payable for the period July 1, 1998, through September 30,
1998, shall be equal to the product of the final adjusted projected
total payment adjustment amount determined for the hospital pursuant
to paragraph (4), multiplied by a fraction that is computed as
follows:
   (I) The maximum amount derived in subclause (III) of clause (i)
shall be increased by an amount equal to the total amount of payment
adjustments paid or payable under subdivision (af).
   (II) The figure derived in subclause (I) shall be divided by the
amount specified in paragraph (2).
   (iv) With respect to an eligible hospital that, as of July 1,
1998, meets the definition of a nonpublic hospital, the maximum
amount payable for the period July 1, 1998, through September 30,
1998, shall be equal to the product of the final adjusted projected
total payment adjustment amount determined for the hospital pursuant
to paragraph (4), multiplied by a fraction that is computed as
follows:
   (I) The maximum amount derived in subclause (III) of clause (i)
shall be increased by an amount equal to the total amount of payment
adjustments paid or payable under subdivision (af).
   (II) The figure derived in subclause (I) shall be divided by the
amount specified in paragraph (2).
   (v) With respect to an eligible hospital that, as of July 1, 1998,
meets the definition of a public hospital, the maximum amount
payable for the period July 1, 1998, through September 30, 1998,
shall be equal to the product of the final adjusted projected total
payment adjustment amount determined for the hospital pursuant to
paragraph (4), multiplied by a fraction that is computed as follows:

   (I) The maximum amount derived in subclause (III) of clause (i)
shall be reduced by the sum of the amounts determined for all
nonpublic-converted hospitals under clause (ii), the amounts
determined for all converted hospitals under clause (iii) and the
amounts determined for all nonpublic hospitals under clause (iv).
   (II) The amounts computed under paragraph (4) with respect to all
public hospitals that are subject to this subparagraph (A) shall be
added together, yielding an aggregate sum.
   (III) The figure derived in subclause (I) shall be divided by the
aggregate sum derived in subclause (II).
   (vi) The resulting product determined for each hospital pursuant
to clauses (ii) through (v), as applicable, shall be distributed to
the hospital in three equal installments, each payable as of the last
day of each month from July 1998 through September 1998.  However,
no hospital shall receive an installment for any month in which the
hospital does not remain in operation for the entire month.  To the
extent that any hospital is not entitled to receive an installment
that otherwise would be payable but for the hospital's failure to
remain in operation through the last day of a particular month, the
amount that would have been paid to the
                hospital shall be redistributed among those hospitals
within the same hospital group (as those groups are described in
clauses (ii) through (v)) that remain in operation from July 1, 1998,
through September 30, 1998, to be distributed on a pro rata basis.
The redistributed amounts shall be payable as of September 30, 1998.

   (B) (i) With respect to the period October 1, 1998, through June
30, 1999, payment adjustment amounts shall be payable to each
eligible hospital in the amount equal to the final adjusted projected
total payment adjustment amount determined for the hospital pursuant
to paragraph (4), less any payment adjustments paid or payable to
the hospital, or payment adjustments that would have been payable but
for the hospital's failure to remain in operation for a particular
month, under subparagraph (A).  The payment adjustments shall be
distributed in eight equal amounts, each payable as of the last day
of each month from October 1998 through May 1999.  However, no
hospital shall receive an installment for any month in which the
hospital does not remain in operation for the entire month.
   (ii) To the extent that any hospital of either of the hospital
types described in clause (iv) or (v) of subparagraph (A) is not
entitled to receive an installment that otherwise would be payable
but for the hospital's failure to remain in operation through the
last day of a particular month, the amount that would have been paid
to the hospital shall be redistributed among those hospitals of the
same hospital type that remain in operation from October 1, 1998,
through June 30, 1999, to be distributed on a pro rata basis.  The
redistributed amounts shall be payable as of June 30, 1999.
   (iii) With respect to a public hospital that, as of July 1, 1998,
is part of a county-operated health system of three or more eligible
hospitals licensed to the county, the hospital's pro rata share of
any reallocations under clause (ii) shall be based on the final
adjusted projected total payment adjustment amount determined for the
hospital pursuant to paragraph (4), as increased by an amount equal
to the amount paid or payable to the hospital under subdivision (af).

   (6) Notwithstanding any other provision of law, for the 1998-99
payment adjustment year, no eligible hospital shall receive total
payment adjustments in excess of the hospital's OBRA 1993 payment
limitation as computed by the department pursuant to the Medi-Cal
State Plan.
   (7) The aggregate sum of the final adjusted projected total
payment adjustment amounts computed under paragraph (4) for each
eligible hospital shall be the maximum size of the payment adjustment
program for the 1998-99 payment adjustment year, exclusive of the
supplemental payment adjustments provided for under subdivision (ah).

   (8) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.
   (ah) (1) For the 1998-99 payment adjustment year, eligible
hospitals that meet the requirements of this subdivision and that are
in operation as of June 30, 1999, shall be eligible to receive a
supplemental lump-sum payment adjustment, which shall be payable as a
result of the facility being a disproportionate share hospital in
operation as of that date, but only if the hospital has remained in
operation for the period October 1, 1998, through June 30, 1999.
   (2) The availability of supplemental lump-sum payment adjustments
under this subdivision shall be determined as follows:
   (A) The maximum state disproportionate share hospital allotment
for California under the provisions of applicable federal medicaid
rules shall be identified for the 1999 federal fiscal year.  It is
estimated that this amount will be two billion seventy-one million
seven hundred seventy-four thousand nine hundred seventy-six dollars
($2,071,774,976).
   (B) The total amount of all payment adjustment amounts under this
section (exclusive of any payments under this subdivision) applicable
to the 1999 federal fiscal year, whether paid or payable, shall be
determined.  The applicability of payment adjustment amounts to the
1999 federal fiscal year shall be determined in accordance with
federal medicaid rules, including Sections 447.297(d)(3) and 447.298
of Title 42 of the Code of Federal Regulations.
   (C) The figure determined under subparagraph (B) shall be
subtracted from the figure identified under subparagraph (A).  If the
remainder is a positive figure, supplemental lump-sum payment
adjustments shall be made under this subdivision in accordance with
paragraph (3).  The positive remainder shall be the maximum amount of
supplemental lump-sum payment adjustments under this subdivision.
   (3) (A) For purposes of supplemental lump-sum payment adjustments
under this subdivision, only hospitals that can be categorized into
either of the two groups specified in clauses (i) and (ii) below
shall be eligible to receive the supplemental payment adjustments,
and no hospital may qualify for more than one of the two groups.  The
following groups of hospitals shall be recognized:
   (i) "Public hospitals," which shall include all eligible hospitals
that, as of July 1, 1998, met the definition of a public hospital.
   (ii) "Nonpublic hospitals," which shall include all eligible
hospitals that, as of July 1, 1998, met the definition of a nonpublic
hospital.
   (B) The amount determined to be the maximum amount of supplemental
lump-sum payment adjustments under subparagraph (C) of paragraph (2)
shall first be allocated between the two groups of hospitals
referred to in subparagraph (A) as follows:
   (i) "Public hospitals":  72.78 percent of the maximum amount.
   (ii) "Nonpublic hospitals":  27.22 percent of the maximum amount.

   (C) The amount of funds allocated pursuant to subparagraph (B) to
each of the particular groups of hospitals referred to in
subparagraphs (A) and (B) shall then be distributed as supplemental
lump-sum payment adjustments among the eligible hospitals within each
particular group as follows:
   (i) The department shall identify for each eligible hospital the
total amount of payment adjustments under this section (exclusive of
any payments under this subdivision) applicable to the 1998-99
payment adjustment year, whether paid or payable.  The applicability
of the payment adjustment amounts to this period of time shall be
determined in accordance with federal medicaid rules, including
Sections 447.297(d)(3) and 447.298 of Title 42 of the Code of Federal
Regulations.
   (ii) The amount identified for each hospital under clause (i)
shall be compared to the OBRA 1993 payment limitation that, in
accordance with applicable provisions of the Medi-Cal State Plan, the
department has computed for the particular hospital for the 1998-99
payment adjustment year.
   (iii) Where the amount computed under clause (i) for the
particular hospital is equal to or exceeds the OBRA 1993 payment
limitation for the hospital, the hospital shall not receive a
supplemental lump-sum payment adjustment.  Data regarding hospitals
that have reached this limitation shall not be used for purposes of
clauses (v) through (viii).
   (iv) Where the amount computed under clause (i) for the particular
hospital is less than the OBRA 1993 payment limitation for the
hospital, the amount computed under clause (i) shall be used for
purposes of clauses (v) through (viii).  Except, however, with
respect to a public hospital that, as of July 1, 1998, was part of a
county-operated health system of three or more eligible hospitals
licensed to the county, the amount computed under clause (i) plus the
amounts paid or payable to the hospital pursuant to subdivision (af)
shall be used for purposes of clauses (v) through (vii), while the
amount computed under clause (i) only shall be used for purposes of
applying the limitation described in clause (viii).
   (v) The figures determined under clause (iv) for each hospital in
the particular group shall be added together to determine an
aggregate total for each group.
   (vi) The figures determined for each hospital under clause (iv)
shall be divided by the aggregate total determined under clause (v)
for the particular group, yielding a percentage figure for each
hospital.
   (vii) The percentage figure determined for each hospital under
clause (vi) shall be applied to the maximum portion of the funds
allocated to the particular group under subparagraph (B), to
determine the hospital's pro rata share of the supplemental lump-sum
payment adjustments.  Except, however, in the case of a nonpublic
hospital that, as of July 1, 1998, met the definition of a children's
hospital, the pro rata share otherwise determined shall be
multiplied by a factor of 1.09, yielding a modified pro rata share.
The pro rata share for the other nonpublic hospitals shall be reduced
accordingly, yielding a modified pro rata share, so that the maximum
portion of the funds allocated to the nonpublic hospitals group will
not be exceeded.  The pro rata share or modified pro rata share, as
applicable, for each hospital, as computed under this clause, shall
also be used for all purposes relating to descending pro rata
distributions under clause (viii).
   (viii) In no event shall a hospital receive supplemental lump-sum
payment adjustment amounts in excess of the difference between the
OBRA 1993 payment limitation for the hospital and the amount computed
for the hospital under clause (i).  Any supplemental lump-sum
payment adjustment amount, or portion thereof, that otherwise would
have been payable under this paragraph to a hospital, but that is
barred by this limitation, shall be distributed on a descending pro
rata basis to those hospitals within the same group.
   (D) The department shall make interim and final payments of the
supplemental lump-sum payment adjustments to hospitals on or before
August 15, 1999.
   (4) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.
   (ai) Notwithstanding any other provision of law, no payment
adjustment amounts shall be payable in connection with the period of
July 1 through September 30 of the 1999-2000 payment adjustment year.
  The payment adjustment program with respect to the period October
1, 1999, through June 30, 2000, shall be structured as set forth
below and in subdivision (aj).
   (1) (A) The department shall compute the projected total payment
adjustment amounts for all eligible hospitals for the 1999-2000
payment adjustment year, by determining for each eligible hospital
its total per diem composite amount and multiplying that figure by
the maximum number of the hospital's Medi-Cal inpatient paid days
determined under paragraph (2) of subdivision (l).  For purposes of
this subparagraph, these determinations shall be without regard to
the OBRA 1993 payment limitations.
   (B) The computed amount referred to in subparagraph (A) for each
hospital shall be compared to the OBRA 1993 payment limitation that,
in accordance with applicable provisions of the Medi-Cal State Plan,
the department has computed for the particular hospital.
   (C) Where the computed amount referred to in subparagraph (A) for
the particular hospital exceeds the OBRA 1993 payment limitation for
the hospital, the amount computed under subparagraph (A) shall be
reduced to an amount equal to the OBRA 1993 payment limitation for
the particular hospital.  The amount so reduced shall be used for
purposes of subparagraph (E).
   (D) Where the computed amount referred to in subparagraph (A) for
the particular hospital is equal to or less than the OBRA 1993
payment limitation for the hospital, the computed amount referred to
in subparagraph (A) shall be used for purposes of subparagraph (E).
   (E) The amounts determined under subparagraphs (C) and (D) for all
eligible hospitals shall be added together, yielding an aggregate
sum.  The aggregate sum shall be the unadjusted projected total
payment adjustment program for the period of October 1, 1999, through
June 30, 2000, exclusive of any supplemental payment adjustments
under subdivision (aj).
   (2) The initial maximum size of the payment adjustment program for
the period October 1, 1999, through June 30, 2000, shall be set at
one billion seven hundred fifty million dollars ($1,750,000,000),
exclusive of any supplemental payment adjustments under subdivision
(aj).
   (3) The department shall increase or decrease the amount
determined for each eligible hospital under subparagraph (C) or (D)
of paragraph (1), as applicable, by multiplying the amount by an
identical percentage, yielding the hospital's tentative adjusted
projected total payment adjustment amount for the period October 1,
1999, through June 30, 2000.  The identical percentage figure to be
used for this purpose shall be that percentage that is derived by
dividing the amount set forth in paragraph (2) by the aggregate sum
determined under subparagraph (E) of paragraph (1).  Except, however,
the amount determined for a hospital under subparagraphs (C) or (D)
of paragraph (1) shall not be increased so that it would exceed the
OBRA 1993 payment limitation for the hospital, and, where that would
otherwise occur, the remaining amount that would have been allocated
to the particular hospital shall be reallocated to all other
hospitals (that have not reached their OBRA 1993 payment limitation)
on a pro rata basis so that the aggregate sum of the tentative
adjusted projected total payment adjustment amount for all hospitals
equals the amounts set forth in paragraph (2).
   (4) The tentative adjusted projected total payment adjustment
amount computed for each eligible hospital under paragraph (3) shall
be further adjusted as follows:
   (A) (i) For each eligible hospital that meets the definition of a
nonpublic-converted hospital as of July 1, 1999, the hospital's
tentative adjusted projected total payment adjustment amount shall be
multiplied by a "nonpublic-converted hospital adjustment factor."
The applicable adjustment factor shall be that which is necessary to
result in an amount for each such hospital equal to the amount used
for the particular hospital under subparagraph (E) of paragraph (1).

   (ii) The resulting product shall be the final adjusted projected
total payment adjustment amount for the hospital for the period
October 1, 1999, through June 30, 2000, which shall be paid to the
hospital in accordance with paragraph (5).
   (B) (i) For each eligible hospital that meets the definition of a
converted hospital as of July 1, 1999, the hospital's tentative
adjusted projected total payment adjustment amount shall be
multiplied by a "converted hospital adjustment factor."  The
applicable adjustment factor shall be that which is necessary to
result for each such hospital in an amount equal to:  (I) the maximum
number of the hospital's annualized Medi-Cal inpatient paid days
determined under paragraph (2) of subdivision (l); multiplied by (II)
the total per diem composite amount determined for the hospital, the
calculation of the per diem composite amount being restricted by a
maximum low-income number of 40 percent for the hospital, regardless
if the hospital's low-income number would otherwise be higher.  In no
case shall the product of this calculation exceed the amount used
for the particular hospital under subparagraph (E) of paragraph (1).

   (ii) The resulting product shall be the final adjusted projected
total payment adjustment amount for the hospital for the period
October 1, 1999, through June 30, 2000, which shall be paid to the
hospital in accordance with paragraph (5).
   (C) (i) For each eligible hospital that meets the definition of a
nonpublic hospital as of July 1, 1999, the hospital's tentative
adjusted projected total payment adjustment amount shall be
multiplied by a "nonpublic hospital adjustment factor."  The
applicable adjustment factor shall be derived as follows:
   (I) The tentative adjusted projected total payment adjustment
amounts determined under paragraph (3) for each nonpublic hospital
shall be added together.
   (II) The amount identified in paragraph (2) shall be divided by
2.130.  The resulting figure shall then be reduced by the sums of the
amounts determined for all nonpublic-converted hospitals under
clause (ii) of subparagraph (A) and all converted hospitals under
clause (ii) of subparagraph (B).
   (III) The amount computed under subclause (II) shall be divided by
2, and the result thereof further reduced by the amount of
thirty-seven million five hundred thousand dollars ($37,500,000).
   (IV) The applicable adjustment factor shall be that ratio that
results from dividing the amount derived in subclause (III) by the
amount derived in subclause (I).
   (ii) The resulting product shall be the final adjusted projected
total payment adjustment amount for the hospital for the period
October 1, 1999, through June 30, 2000, which shall be paid to the
hospital in accordance with paragraph (5).  Except, however, in no
case shall the final adjusted projected total payment adjustment
amount exceed the hospital's OBRA 1993 payment limitation, and, where
that would otherwise occur, the remaining amount that would have
been allocated to the particular hospital shall be reallocated to all
other nonpublic hospitals (that have not reached their OBRA 1993
payment limitation) on a pro rata basis so that the aggregate sum of
the final adjusted projected total payment adjustment amounts for all
nonpublic hospitals equals the amount derived in subclause (III) of
clause (i).
   (D) (i) For each eligible hospital that meets the definition of a
public hospital as of July 1, 1999, the hospital's tentative adjusted
projected total payment adjustment amount shall be multiplied by a
"public hospital adjustment factor."  The applicable adjustment
factor shall be derived as follows:
   (I) The tentative adjusted projected total payment adjustment
amounts determined under paragraph (3) for each public hospital
described above shall be added together.
   (II) The amount identified in paragraph (2) shall be reduced by
the sums of the amounts determined for all nonpublic-converted
hospitals under clause (ii) of subparagraph (A) and all converted
hospitals under clause (ii) of subparagraph (B), and the sum of the
amounts determined for all nonpublic hospitals under clause (ii) of
subparagraph (C).
   (III) The applicable adjustment factor shall be that ratio that
results from dividing the amount derived in subclause (II) by the
amount derived in subclause (I).
   (ii) The resulting product shall be the final adjusted projected
total payment adjustment amount for the hospital for the period
October 1, 1999, through June 30, 2000, which shall be paid to the
hospital in accordance with paragraph (5).  Except, however, in no
case shall the final adjusted projected total payment adjustment
amount exceed the hospital's OBRA 1993 payment limitation, and, where
that would otherwise occur, the remaining amount that would have
been allocated to the particular hospital shall be reallocated to all
other public hospitals (that have not reached their OBRA 1993
payment limitation) on a pro rata basis so that the aggregate sum of
the final adjusted projected total payment adjustment amounts for all
public hospitals equals the amount derived in subclause (II) of
clause (i).
   (5) (A) The final adjusted projected total payment adjustment
amount determined for each eligible hospital for the period October
1, 1999, through June 30, 2000, shall be distributed to the hospital
in 8 equal installments, each payable as of the last day of each
month from October 1999 through May 2000.  However, no hospital shall
receive an installment for any month in which the hospital does not
remain in operation for the entire month.
   (B) To the extent that any hospital of either of the hospital
types described in subparagraph (C) or (D) of paragraph (4) is not
entitled to receive an installment that otherwise would be payable
but for the hospital's failure to remain in operation through the
last day of a particular month, the amount that would have been paid
to the hospital shall be redistributed among those hospitals of the
same hospital type that remain in operation from October 1, 1999,
through June 30, 2000, to be distributed on a pro rata basis.  The
redistributed amounts shall be payable as of June 30, 2000.
   (6) Notwithstanding any other provision of law, with respect to a
hospital that meets the definition of a public hospital as of July 1,
1999, the provisions of paragraphs (1) through (5) shall initially
be implemented for the period October 1, 1999, through December 31,
1999, without application of the OBRA 1993 payment limitations.  As
of January 1, 2000, the department shall recalculate all
determinations under paragraphs (1) through (5) for the payment
adjustment year, taking into account the hospital's OBRA 1993 payment
limitation as determined pursuant to federal medicaid law in
existence as of January 1, 2000, and adjust, as necessary, the
monthly payment installments from January 2000 through May 2000 to
take into account any modifications to the recalculated amounts
payable for the period October 1999 through December 1999 as may
arise from the application of this paragraph.
   (7) Notwithstanding any other provision of law, for the entire
1999-2000 payment adjustment year, no eligible hospital shall receive
total payment adjustments in excess of the hospital's OBRA 1993
payment limitation as computed by the department pursuant to the
Medi-Cal State Plan.
   (8) The aggregate sum of the final adjusted projected total
payment adjustment amounts computed under paragraph (4) for each
eligible hospital for the period October 1, 1999, through June 30,
2000, shall be the maximum size of the payment adjustment program for
the entire 1999-2000 payment adjustment year, exclusive of the
supplemental payment adjustments provided for under subdivision (aj).

   (9) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.
   (aj) (1) For the 1999-2000 payment adjustment year, eligible
hospitals that meet the requirements of this subdivision and that are
in operation as of June 30, 2000, shall be eligible to receive a
supplemental lump-sum payment adjustment, which shall be payable as a
result of the facility being a disproportionate share hospital in
operation as of that date, but only if the hospital has remained in
operation for the period October 1, 1999, through June 30, 2000.
   (2) The availability of supplemental lump-sum payment adjustments
under this subdivision shall be determined as follows:
   (A) The maximum state disproportionate share hospital allotment
for California under the provisions of applicable federal medicaid
rules shall be identified for the 2000 federal fiscal year.
   (B) The total amount of all payment adjustment amounts under this
section (exclusive of any payments under this subdivision) applicable
to the 2000 federal fiscal year, whether paid or payable, shall be
determined.  The applicability of payment adjustment amounts to the
2000 federal fiscal year shall be determined in accordance with
federal medicaid rules, including Sections 447.297(d)(3) and 447.298
of Title 42 of the Code of Federal Regulations.
   (C) (i) The figure determined under subparagraph (B) shall be
subtracted from the figure identified under subparagraph (A).  If the
remainder is a positive figure, supplemental lump-sum payment
adjustments shall be made under this subdivision in accordance with
this subparagraph and paragraph (3).
   (ii) The positive remainder derived under clause (i) shall be the
maximum amount of supplemental lump-sum payment adjustments under
this subdivision where:  (I) effective for at least the 1999-2000
payment adjustment year, federal legislation is enacted regarding the
application of the OBRA 1993 payment limitation with provisions
substantially similar in effect to Section 4721(e) of the federal
Balanced Budget Act of 1997 (P.L.  105-33) as that related to the
1997-98 and 1998-99 payment adjustment years; and (II) all necessary
amendments to the Medi-Cal State Plan implementing that federal
legislation as it relates to the 1999-2000 payment adjustment year
have been approved by the federal Health Care Financing
Administration.
   (iii) If any element set forth in clause (ii) is not satisfied,
the maximum amount of supplemental lump-sum payment adjustments under
this subdivision shall be the lesser of:  (I) the positive remainder
derived in clause (i); or (II) one hundred six million dollars
($106,000,000).
   (3) (A) For purposes of supplemental lump-sum payment adjustments
under this subdivision, only hospitals that can be categorized into
either of the two groups specified in clauses (i) and (ii) below
shall be eligible to receive the supplemental payment adjustments,
and no hospital may qualify for more than one of the two groups.  The
following groups of hospitals shall be recognized:
   (i) "Public hospitals," which shall include all eligible hospitals
that, as of July 1, 1999, met the definition of a public hospital.
   (ii) "Nonpublic hospitals," which shall include all eligible
hospitals that, as of July 1, 1999, met the definition of a nonpublic
hospital.
   (B) The amount determined to be the maximum amount of supplemental
lump-sum payment adjustments under subparagraph (C) of paragraph (2)
shall first be allocated between the two groups of hospitals
referred to in subparagraph (A) as follows:
   (i) "Public hospitals":  71.64 percent of the maximum amount.
   (ii) "Nonpublic hospitals":  28.36 percent of the maximum amount.

   (C) The amount of funds allocated pursuant to subparagraph (B) to
each of the particular groups of hospitals referred to in
subparagraphs (A) and (B) shall then be distributed as supplemental
lump-sum payment adjustments among the eligible hospitals within each
particular group as follows:
   (i) The department shall identify for each eligible hospital the
total amount of payment adjustments under this section (exclusive of
any payments under this subdivision) applicable to the 1999-2000
payment adjustment year, whether paid or payable.  The applicability
of the payment adjustment amounts to this period of time shall be
determined in accordance with federal medicaid
                      rules, including Sections 447.297(d)(3) and
447.298 of Title 42 of the Code of Federal Regulations.
   (ii) The amount identified for each hospital under clause (i)
shall be compared to the OBRA 1993 payment limitation that, in
accordance with applicable provisions of the Medi-Cal State Plan, the
department has computed for the particular hospital for the
1999-2000 payment adjustment year.  For all purposes under this
subdivision, calculations of the OBRA 1993 payment limitations for
public hospitals shall not be performed prior to January 1, 2000, as
referred to in paragraph (6) of subdivision (ai).
   (iii) Where the amount computed under clause (i) for the
particular hospital is equal to or exceeds the OBRA 1993 payment
limitation for the hospital, the hospital shall not receive a
supplemental lump-sum payment adjustment.  Data regarding hospitals
that have reached this limitation shall not be used for purposes of
clauses (v) through (viii).
   (iv) Where the amount computed under clause (i) for the particular
hospital is less than the OBRA 1993 payment limitation for the
hospital, the amount computed under clause (i) shall be used for
purposes of clauses (v) through (viii).
   (v) The figures determined under clause (iv) for each hospital in
the particular group shall be added together to determine an
aggregate total for each group.
   (vi) The figures determined for each hospital under clause (iv)
shall be divided by the aggregate total determined under clause (v)
for the particular group, yielding a percentage figure for each
hospital.
   (vii) The percentage figure determined for each hospital under
clause (vi) shall be applied to the maximum portion of the funds
allocated to the particular group under subparagraph (B), to
determine the hospital's pro rata share of the supplemental lump-sum
payment adjustments.  Except, however, in the case of a nonpublic
hospital that, as of July 1, 1999, met the definition of a children's
hospital, that pro rata share otherwise determined shall be
multiplied by a factor of 1.09, yielding a modified pro rata share.
The pro rata share for the other nonpublic hospitals shall be reduced
accordingly, yielding a modified pro rata share, so that the maximum
portion of the funds allocated to the nonpublic hospitals group will
not be exceeded.  The pro rata share or modified pro rata share, as
applicable, for each hospital, as computed under this clause, shall
also be used for all purposes relating to descending pro rata
distributions under clause (viii).
   (viii) In no event shall a hospital receive supplemental lump-sum
payment adjustment amounts in excess of the difference between the
OBRA 1993 payment limitation for the hospital and the amount computed
for the hospital under clause (i).  Any supplemental lump-sum
payment adjustment amount, or portion thereof, that otherwise would
have been payable under this paragraph to a hospital, but that is
barred by this limitation, shall be distributed on a descending pro
rata basis to those hospitals within the same group.
   (D) The department shall make interim and final payments of the
supplemental lump-sum payment adjustments to hospitals on or before
August 15, 2000.
   (4) The department shall implement this subdivision only to the
extent consistent with federal medicaid law and the Medi-Cal State
Plan, and only to the extent that the department determines that
federal financial participation is available.
   (ak) (1) Notwithstanding any other provision of law, except as set
forth in paragraph (2), with respect to the 2000-01 payment
adjustment year and subsequent payment adjustment years, no payment
adjustment amounts shall be payable in connection with the period
from July 1 through September 30 of each payment adjustment year.
   (2) To the extent that any portion of the maximum state
disproportionate share hospital allotment for California for the 2000
federal fiscal year or any subsequent federal fiscal year is not
otherwise expended under the program with respect to the period from
October 1 through June 30 of the particular federal fiscal year, the
remaining portion of the allotment shall be expended with respect to
the period from July 1 through September 30 of the particular federal
fiscal year.
   (3) With respect to the 2000-01 payment adjustment year and
subsequent payment adjustment years, the department shall take all
reasonable steps as are necessary to align the program with the
federal allotment for the period from October 1 through June 30 of
each payment adjustment year.
  SEC. 2.  On or before June 29, 1999, the State Department of Health
Services shall take all necessary steps to arrange for the
publication of any public notices that are required or appropriate
under federal or state law, in order to ensure an effective date for
this act of no later than June 30, 1999, for federal medicaid
purposes.  Notwithstanding any other provision of law, the department
may arrange for the publication of any notice through a private
vendor, on a bid or nonbid basis, on an exclusive or nonexclusive
basis, and without review or approval by any other department,
agency, or instrumentality of the state.  The costs of publishing any
notice through a private vendor shall be recovered by the department
from the Medi-Cal Inpatient Payment Adjustment Fund.
  SEC. 3.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to ensure sufficient funding for disproportionate share
providers in the Medi-Cal program, to enable them to provide
sufficient access to Medi-Cal benefits as soon as possible, it is
necessary that this act take effect immediately.
